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Minutes for January 15, 1957
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.
Martin
Szymczak
Vardaman
x
Mills
Goy, Robertson
Gov.
Balderston
Gov. Shepardson
.11 raill.cee attached
set of minutes was sent to Governor Vardaman's office in
Nov c1anee with the procedure approved at the meeting of the Board on
:
mioer 29$
(The set was returned by Governor Vardaman's office
that the statM (see Mr. Kenym's memorandum of February 12, 1957)
hereafter Governor
Vardanan would not initial any minutes of meetSh; °f the Board at which he was not present. Therefore, with Governor
liar4tnnTgrar
eal„ these minutes are being filed without Governor
Minutes of actions taken by the Board of Governors of the
Federal Reserve System on Tuesday, January 15, 1957.
The Board met
in the
Board Room at 10:30 a.m.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Martin, Chairman
Balderston, Vice Chairman
Mills
Robertson
Mr.
Mr.
Mr.
Mr.
Carpenter, Secretary
Vest, General Counsel
Hackley, Associate General Counsel
O'Connell, Assistant General Counsel
This morning Messrs. Schapiro and Hickey called at the Chairman's
"ries and since he was occupied and at his suggestion they went to see
Governor
Robertson.
Mr. Schapiro is Chairman of the Advisory Council
t0 the J°int Legislative Committee on the Revision of the Banking Laws
Of the
State of New York and he and Mr. Hickey are two of the 17 members
Of the c
°uncil established to study the banking structure of the State,
tv° (3f the five members of the Council who are not members of the banking
Pr"eeeiony and two of the three members of the Council not connected
vith banks.
Governor Robertson stated that after referring to the report in
today,
8 18811e of
the New York Times that the Governor of New York had
ssnt a
message to the State Legislature in which he asked for a freeze
May
1, 1958 on further expansion of bank holding companies within
the +_
ste Mr.
Schapiro made substantially the following statement:
the Governor's message the Council on
=
P
s
last
with Senator Pierce present) discussed a
Propostlal
bill which would provide that until May 10 1958
100
1/15/57
-2no holding company could be formed within the State: no
existing holding company could expand outside the banking
district in which it vas operating, and no holding company operating in more than one banking district could
expand in any manner. It is probable that the Legislature
will act on January 23 to adopt the proposed bill unless
something is done.
The Council would like to oppose a freeze and would
recommend against its adoption if it could get a letter
from the Board of Governors stating that the hearing on
the holding company applications involving the First
National City and the County Trust Company were postponed or held open until after the end of the legislative
session in April of this year. That would give the Legislature time to consider the action that should be taken
and in that event it vas not likely that a freeze law
would be enacted. We (Messrs. Schapiro and Hickey) were
asked by the Council and Senator Pierce to call on the
Board and ascertain if it would be willing to postpone
the hearing or keep it
open until after the end of the
legislative
session.
(In response to a question from Governor Robertson
regarding the implication of the suggested postponement
in view of the Governor's message to the Legislature).
The
Council would like to avoid any freeze and since the
Board has authority to determine the extent of a hearing
under the Bank Holding Company Act and the length of such
a hearing
the Board had ample ground on which to keep the
hearing
and it would be a mistake to bring about a
situatiocrrn
which would force the Legislature into taking
action which could not be as well considered as more
leisurely
-Leisurely action and therefore lead to bad instead of good
legislation. The Council is in a hurry because it is proPosed to start processing the bill tomorrow.
at this
Mr* Molony, Special Assistant to the Board, joined the meeting
Point.
Governor Robertson said he told Messrs. Schapiro and Hickey that
he 140104
Ilere z—
bring the matter to the attention of the Board and see if there
'
s ilY Other
Westions to ask and that he would try to get an answer
101
1/15/57
-3-
bY to
morrow.
He added that he then called in Messrs. Hackley and
("Connell and repeated the substance of Mr. Schapiro's statement to
assure that he
had a correct understanding of the Council's proposal
alld to give Messrs. Hackley and O'Connell an opportunity to ask any
qUestions that they
might have so that the Board would be in a position
to
to a conclusion on the
matter.
During the consideration of the questions presented in Mr.
Sella
Pirose
statement there was a discussion, among other points, of (1)
Whether the
proposed New York statute would be valid to prevent the
°Ileration or expansion in the State of New York of any bank holding
c°1311W4Y
pursuant to authorization given by the Board of Governors under
the au+1,
—4)11tY of the Bank Holding Company Act of 1956, (2) the authority
"thzoard to postpone or hold open the contemplated hearing and the
131'3PreletY of such
action, (3) the actions that might be taken by the
411
'and (4) whether the Board should take the Schapiro proposal up
With urie
First National City
group.
Governor Mills held to the view that the Board should take no
other than to
proceed with the hearing in the normal course and
11111te the a
ppropriate representatives of the Advisory Council to pretheir view
at the
8a.1
hearing'
At the conclusion of the hearing, he
the Board
could withhold a decision for any reasonable length of
ti*Ine lencling the outcome
of the debate in the New York State Legislat4requestion of legislative policy.
He felt that if the
102
1/15/57
Advisory Council wished to pursue the suggestion presented by Mr.
SchaPiro it
should take the matter up directly with the First National
City group.
During the discussion, Nt. O'Connell presented briefly his
()bee
rvations during the recent hearings in New York on proposed changes
ta the
New York banking laws.
At the conclusion of the
discussion it was agreed (1) that
Chairman Martin should call Mr.
Sheperd, Chairman of the First
Nation/al City- Bank, and tell him
of the suggestion made by Mr.
Schapiro and that the Board would
act on the suggestion on Friday of
this week and be and his associates
were at liberty to present to the
Board any comments that they might
wish) (2) that Governor Robertson
would tell Mr. Schapiro that there
would be no decision on the matter
until Friday, and (3) that the
Board would decide on Friday what
If any other steps should be taken.
On this action Governor Mills voted
"no".
The
meeting then adjourned.
Secretary's Note: During the day Governor
Balderston, acting as alternate to Governor
Shepardson, approved on behalf of the
Board a memorandum dated January 10, 1957,
from Mt. Sloan, Director, Division of Examinations, recommending that the official
headquarters of Charles E. Aikens, Assistant
103
1/15/57
-5Federal Reserve Examiner in that Division,
be changed from Philadelphia, Pennsylvania,
to Washington, D. C.
Secretary's Note: The resignation of Mr.
Shannon Crandall, Jr., as a director of the
Los Angeles Branch, Federal Reserve Bank of
San Francisco, having been received in a
letter dated January 10, 1957, a letter over
the signature of Chairman Martin was sent
to Mr. Crandall today accepting the resignation.
@FedFRASER