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Minutes for To: January 161 1962 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 'ith 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 °' 11115r that you have seen the minutes. Chin. Martin Gov. Mills Gov. Robertson Gov. Balderston Gov. Shepardson Gov. King Gov. Mitchell Minutes of the Board of Governors of the Federal Reserve System an Tuesday, January 16, 1962. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Mr. The Board met in the Board Room at 10:00 a.m. Martin, Chairman Balderston, Vice Chairman Mills Robertson Shepardson King Mitchell Sherman, Secretary Kenyon, Assistant Secretary Thomas, Adviser to the Board Molony, Assistant to the Board Fauver, Assistant to the Board Cardon, Legislative Counsel Hackley, General Counsel Noyes, Director, Division of Research and Statistics Mr. Farrell, Director, Division of Bank Operations Mr. Solomon, Director, Division of Examinations Mr. O'Connell, Assistant General Counsel Mr. Shay, Assistant General Counsel Mr. Conkling, Assistant Director, Division of Bank Operations Mr. Daniels, Assistant Director, Division of Bank Operations Mr. Leavitt, Assistant Director, Division of Examinations Mr. Young, Senior Attorney Mr. Veenstra, Technical Assistant, Division of Bank Operations Mr. Achor, Review Examiner, Division of Examinations Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Items circulated to the Board. The following items, which had heti circulated to the Board and copies of which are attached to these iktrkte s under the respective item numbers indicated, were approved 1114111710us1y: Item No. „ Letter 4. to Chemical Bank New York Trust Company, to , New York, approving an extension of time est ablish a branch at 67 Broad Street. 1 1/16/62 -2Item No. Letter to The Fifth Third Union Trust Company, —olnnati, Ohio, approving the establishment of a branch at Glendale-Milford Road and Saint Rita Laxle, Evendale, 2 Letter to the Federal Reserve Bank of New York interposing no objection to an officer serving as eonal assistant to the Under Secretary of the %jeasury for Monetary Affairs for a period of 4roximately six months. 3 r Proposed revision of G.7 release. There had been circulated to the Board a draft of letter to the Federal Reserve Banks regarding proposed chanr, ses in the Board's semi-monthly 0.7 statement showing Assets and Liabilities of All Banks in the United States and a Consolidated Condition Statement for Banks and the Monetary System. Changes in the related tables 111 the Federal Reserve Bulletin also were contemplated. The letter indicated that the changes would make the 0.7 statement substantially consistent with the related series on the daily average money supply and with the flow of A/1148 banking sector accounts. In discussion, Mr. Farrell presented certain questions that had 'red to the Division of Bank Operations regarding the suggested changes, \41 he indicated had originated in the Division of Research and Statistics. enl r--Y to a question, he suggested three possible alternatives: (1) to the Proposed changes into effect, even though the Division of Bank 4 'Ms did not, at least at this point, fully understand or agree with th em(c) to eliminate the consolidated condition statement for banks and the 111°Iletary system from the G.7 release; (3) to defer action on the n eal pending further study. 1/16/62 -3Further discussion resulted in a suggestion by members of the Board that before any action was taken, the proposal should be submitted in Such form as to afford a better basis for evaluation by the Board of the issues involved. Looking toward such a submission, it was suggested that Governor Balderston be asked to confer with the staff regarding the development of an appropriate memorandum. Agreement having been expressed with this suggestion, it was ood that further work on the subject would proceed in the manner joated and that the subject would then be reconsidered by the Board. Messrs. Thomas, Noyes, Conkling, Daniels, and Veenstra then thclrew from the meeting. 19port on competitive factors (Portland-Dallas, Oregon). There ha4been distributed to the Board a draft of report to the Comptroller of the Currency on the competitive factors involved in a proposed merger ot -44-uas City Bank, Dallas, Oregon, into The First National Bank of ' II) Portland, Portland, Oregon. Discussion of the report resulted in agreement on certain changes the language of the conclusion, following which the report was approved tor transmission to the Comptroller in a form in which the conclusion read aa follows: 0 The proposed merger of The First National Bank of /1)!?PrI, Portland, Portland, Oregon, and Dallas City Bank, : 4-Las, Oregon, would have little effect on banking `'m!lpetition in the State of Oregon. While competition ,xisting e between the two banks would be eliminated, ' °nsummation of the proposed merger might increase 1/16/62 competition in the Dallas area, for then not only a new bank could be established in Dallas but also branches of other banks could be located therein. However, the merger would continue the trend toward concentration of banking resources in Oregon, a State where two banks now control more than 83 per cent of commercial bank deposits and operate two-thirds of commercial banking Offices. Governor Mills abstained from participation in the discussion of, and action on, the foregoing report. Application of United California Bank. On September 26, 1961, the Board denied the application of United California Bank, Los Angeles, California, for permission to merge into itself The Southwest Bank, Illglewood, California. On October 20, 1961, the Board denied United California's petition for reconsideration and its request for an oral Pliesentation to the Board. Under date of November 22, 1961, United California Bank submitted a renewed petition for reconsideration on the haeia of information set forth in an attached statement. There had now been distributed to the Board a memorandum from the Division of Examinati°48 dated January 3, 1962, commenting on the information presented by the aPPlicant bank in its petition for reconsideration and recommending that United California Bank and The Southwest Bank be granted an opport/11 % to make an oral presentation to the Board. Mr. Solomon commented that this application had been denied during 4PeriOd when the Board was experimenting with procedures relating to bank 4er„, tber cases that were adopted on July 27, 1961, and had now been superseded. 1.11 accordance with the procedure then in effect, the Board, after preliminary e°11eideration of the application, had inquired of United California Bank 1/16/62 Whether it wished to present additional views or information either orally or in writing. The bank chose to submit additional material in writing and did not request an oral presentation at that time. Subsequently, after the application was denied by the Board, the bank requested an opportunity for oral presentation. That request was denied, however, because the bank did not appear to have presented any significant additional information in 811PPort of its request. Now the applicant bank had submitted further information and had again requested the privilege of oral presentation. The new material dealt to a considerable extent with alleged deterioration °I. the position of The Southwest Bank, particularly from the standpoint of 41411ageraent. It seemed to the Division of Examinations that it would be 413Propriate to hear the requested oral presentation. Mr. Hackley pointed out the Boardis Rules of Procedure cal3ed for area Presentations in merger cases to be public unless otherwise ordered hY t he Board. In this instance, it appeared that a substantial part of the, Presentation might relate to the management of The Southwest Bank. Ther the Board might wish to consider a private proceeding, with 110 n -°'iee published in the Federal Register. Mr. Molony commented, in reply to a question as to the public relations aspect of a decision to hold a private proceeding, that there "°111d be good cause for any deviation from the practice provided for in the Rules of Procedure. kr. Rackley. In this case, such a reason had been stated by In further discussion, question was raised as to whether the mstances would warrant reconsideration of the application without 1/16/62 -6- g°ing through the process of oral presentation. However, the reply t° a question directed to the Division of Examinations indicated that the Division was not informed of a need for urgent action. It was pointed °lit, in this connection, that the information available to the Board indicating a deterioration of the position of The Southwest Bank consisted °I' representations on the part of the applicant bank. As to the broad • Prinelple involved in the procedural question, there was general agreement Kth an opinion expressed by the Chairman that except in unusual circumstances it 140111d seem desirable for the Board not to depart from the procedures that 4 had adopted only recently and with which it was now experimenting. liellever, in order that the Board might have current information on developat The Southwest Bank, it was suggested that the Federal Reserve Bank of San Francisco could be asked to send a member of its staff to Los Angeles f°11 the purpose of making an investigation and rendering a report. At the conclusion of the discussion it was agreed unanimously to gliallt the request for oral presentation, and the staff was authorized to plaice the necessary arrangements. It was understood that the proceeding 110111 a not be public, and Thursday, January 25, was suggested as a possible date. It was also agreed to request the San Francisco Reserve Bank to qtai n current information on the situation at the Inglewood bank and to tallsrnit a report to the Board. Secretary's Note: Arrangements were made subsequently to hold the oral presentation on January 25, 1962. Messrs. O'Connell, Shay, and Achor then withdrew from the meeting. k 1/16/62 —7— Regulation 0 (Item No. 4). At the Board meeting on October 20, 1961) Preliminary consideration was given to a question raised by the Crocker-Anglo National Bank, San Francisco, California, as to whether er4)1°Yees of the bank (about 100 in number) who had authority to make cer"tain types of loans, in some cases up to $5,000 and in other cases 111) to $7,500, should be regarded as executive officers of the bank for the Purposes of section 22(g) of the Federal Reserve Act and the Board's Regulation 0, Loans to Executive Officers of Member Banks. At that time the Board deferred action pending preparation of a further memorandum by theLegal Division. 1°ecellter 7, 1961. Such a memorandum had been distributed under date of The Legal Division continued of the opinion that in 11.1e/g of the underlying purposes of the law and its legislative history, the , k,rocker-Anglo employees should not be considered executive officers ot the bank. It was pointed out, however, that under the law the Board had authority to define the term "executive officer" and that accordingly the oard might wish to adopt an amendment either (1) to broaden the ltlon so as clearly to include bank personnel of the type in question, I to limit the definition to encompass only a small number of bank otti, 'ers who represented the recognized management group. A draft of let to the Federal Reserve Bank of San Francisco was submitted with the te morandum. In commenting on the matter, Mr. Hackley stated that the legislative histo- 80 far as it related to Congressional intent, was not entirely 1/16/62 -8- clear, although there was some indication from statements made by members Of the Congress that the Congress had in mind the top officers of a bank. In the days following the enactment of section 22(g), when it was a 41minal 4 statute, the Department of Justice evidently had some difficulty because of the uncertain nature of the term "executive officer.H Mr. Hackley said that after giving further consideration to the Crocker-Anglo case the Legal Division continued to feel that the circumstances differed sufficiently from an earlier case involving employees of the Girard 11111st Corn Exchange Bank, Philadelphia, Pennsylvania, to warrant a different ec3ncausi0n. Although the approximately 100 employees of Crocker-Anglo had alltrity to make loans in amounts as large as'7,500, they did so only in a(*)rd with prescribed standards. In the earlier case, the lending Persscrinel had unlimited discretion to make loans within certain limits. The Legal Division felt that to hold the statute applicable to the Crocker441 employees, in the circumstances described, would go beyond the intent p 1c)11gress and beyond the Boardts regulatory definition of an executive otricer: . .. every officer of a member bank who participates or has Or 41111'itY to participate in the operating management of the bank or any 1311ch thereof otherwise than in the capacity of a director of the bank, Itlartliess of whether he has an official title or whether his title contains designation of assistant and regardless of whether he is serving without 4rY or other compensation." The Legal Division questioned whether the 4c)eker-Anglo employees were actually participating in the operating • _ I 1/16/62 -9- arlagement of the bank, but the Division recognized that was a matter f(xti the Board to decide in its discretion. Also, the Board could, if it wished, alter the regulatory definition of executive officer to make it acorn y restrictive and limited to the top officers of a bank or to exPand the definition to cover any person with authority to make loans. °131riously, evasion would be possible if the term "executive officer" Was defined on the basis of official titles, for a person could have 411thority without title. Governor Mills commented that although this question had arisen 8 ' t 4 his Particular bank, the decision would have broader applicability. In °PiniOn, it would not be correct to interpret the law and regulation 'aPPlicable to the approximately 100 Crocker-Anglo employees. 'Where Aetionary authority was given to a lending officer of a bank, whatever his ti+, that person was participating in the risk-taking function, and question whether a formula was provided as guidance for his decisions 1148 of secondary importance. In this case, consumer credit decisions were 1111431/red. However, if an officer was lending on the collateral of U. S. Goiter nment securities, municipal securities, or equities, the bank management e°1114 set a framework for the guidance of that officer, and at the same he would be exercising discretion. On the matter of automotive loans, ?az to escribed in the Crocker-Anglo case, he would guess that a line of credit set for auto and truck dealers and that the lending officer was permitted e(tend credit up to the limit of the approved line of credit. At the 1/16/62 -10- same time, however, that officer must exercise discretion regarding the quality of the paper. If it was non-recourse paper, he must look to the resPonsibility of the maker. Unquestionably, the lending officer would be making decisions. Over all, Governor Mills said, the problem was whether or not it was wise policy to require the responsible officers of a bank to disclose their borrowings. He thought that it was. If a loan officer wanted to b°1"row from his own bank, he should have to apply to the bankts board of dil ' ectors to obtain approval. If he went outside his own bank, he should 1141re to report those borrowings. This was necessary and desirable infor- rn4tion for a bank's directors to have, on an obligatory basis, in order Prelient collusion between lending officers and borrowers. The weakness the law was the low limit of $2,500 on borrowings by an executive (3fricer from his awn bank. However, a lenient interpretation on a matter 811ch as the Crocker-Anglo inquiry would not cure the deficiency in the The law should be amended to set a higher limit. Mr. Hackley commented at this point that if the Board should take the Position that the Crocker-Anglo employees were executive officers of the b ank, it occurred to him that there might be many other large banks in the e°11ntry that delegated just as much lending authority to personnel and had raised with the Board the question whether those persons should be re*' I deol as executive officers for the purpose of Regulation O. It might be, kAther unfair to Crocker-Anglo if an adverse interpretation was not kit shed. On the other hand, if the Board should adopt the position set ' 1/16/62 -11- forth in the letter suggested by the Legal Division, it would seem desirable to review the Girard Trust case to see whether there was actually sufficient difference to warrant the restrictive interpretation that had been made in that case. the The proposed letter, as submitted for Board's consideration, was written on the basis of the facts of a Particular case. In other words, an ad hoc decision was envisaged. Governor Robertson said he had a great deal of sympathy for the *views stated by Governor Mills. In his opinion, the harm done by a strict interpretation would not be great, and there were favorable aspects °f such an interpretation. He felt that the Board either should revise rtegulation 0 so that its position would be known throughout the country or Stick to the type of interpretation it had made before. The Board 81/culd not make rules that were known by some institutions but not by others. Governor Shepardson commented that as he understood the rationale bacl, of the law when it was enacted, it did not seem to him that it was s mplated, in the case of large institutions, that the provisions of thei would be applicable to every person who happened to have authority to, aes on certain categories of loans. Instead, he understood that the ' aav "as intended to be applicable to the responsible management officers Of b anks. This would vary according to the size of banks. In a small bank 'Persons who passed on loans also would have responsibility for the management of the bank. In a large bank, there might be a group e MPlcyees well down the line of authority who were engaged in making I 0) JL-kj 1/16/62 -12- loans subject to the supervision, control, and direction of officers at the management level, and it did not appear from the Legal Division's Memorandum that the law was aimed at such persons. As to whether cases like the Crocker-Anglo case should be handled on an ad hoc basis in light of the varying conditions in different banks of different sizes, he Was not sure. It would seem desirable to have a clear-cut rule if the situation permitted. However, as he considered the difficulties ill/laved in trying to formulate a clear-cut rule, his inclination would be t° handle the Crocker-Anglo case on an ad hoc basis. Governor King said he could not see enough difference between the Crocker-Anglo and Girard Trust cases to warrant coming to different °°11clusions. Although the lending authority was limited and certain getieral policies were prescribed for the lending personnel, there was a matter of judgment involved. Therefore, he would apply to the eicer-Anglo inquiry the kind of decision reached in the Girard Trust aSe. Question might exist as to whether or not the law was a good one, Whether it seemed to cover more people than it should cover. 1°11g a8 Inter However, the law was on the statute books, he would favor a strict pretation. He noted that sometimes there was an inclination to want 1418 enacted, but not to want to see them applied. Governor Mitchell expressed agreement with the views stated by Shepardson and said he would favor sending to the San Francisco Ilese rlre Bank the letter that had been drafted by the Legal Division. He l'ather skeptical as to the possibility of writing Regulation 0 so that • ;T. 1/16/62 -13- the Point under discussion would be completely clear; perhaps it was Just as well to proceed on the basis of letting a pattern develop out Of specific cases. Governor Balderston said that he had a good deal of sympathy 'with the points made by Governors Mills and Robertson. He also said that he liked the breadth of approach taken by the Legal Division in its Consideration of this problem. dividing line. The thing he was searching for was a He would favor, he thought, a modification of the definition of "executive officer" so as to refer to those who participated the operating management or lending decisions of a bank or any of its btanches. In saying this, he was trying to distinguish between the teller 114°) if he was careless might lose money for his bank and the lending fficer who ought not be exposed to the temptation of collusion. In 8eal 'ehing for a dividing line, he thought that the adding of a reference to Pel'sons having discretion in lending decisions might improve the current derinitione Mr. Hackley commented that an extension of the definition to include Pe118°ns Participating in the making of loans could be accomplished by the Atibl ication of an interpretation . On the other hand, an amendment to Re ation 0 would be published in advance in the Federal Register for nt. In this instance, he felt sure that the comments would be e'q,ensi -""ve. Therefore, if the Board was disposed to adopt the general 1Pie that the making of loans, whether or not under limited authority, e°4stif --uted participation in the management of a bank, it might be better to pr _oe eed through an amendment of the Regulation. _A 1116/62 -14Chairman Martin commented that if he were operating a bank, he inight want to know what all of the employees were doing. try However, to to proceed toward that objective by means of law and regulation He regarded the proposed letter on the Crocker- seemed to him a mistake. g10 case as appropriate. If the Board wanted to seek legislation to cover a wider range of personnel because of potential abuses, that was 4 different matter, but he did not believe there was evidence of abuse at the present time. Mr. Solomon indicated, in reply to a question, that the Division Ot aftinations had not run across cases where decisions in this regard, 0flellaY or the other, were such as to affect the soundness or solvency 41450 ' In his opinion, the magnitude of the problem could be exaggerated either direction. He doubted seriously whether a strict interpretation °t the law would create any great hardship for banks; on the other hand, he — .-Qubted whether a lenient interpretation would open the gate to 11)8tantial difficulties. From the examiner's standpoint, something be said for reaching a fairly definite position. That would be helprio . in the conduct of examinations. Chairman Martin remarked that he did not think any great hardship 110.111.,, result from a strict interpretation, but that he thought such a e )11r se would create, needlessly, a certain amount of irritation throughout the b anking community. () There should be no reluctance to irritate when --ing was to be gained. ItAY irritations. When there was not, he saw no reason for t 4/16/62 In further discussion, Governor Robertson expressed the view that if the Board sent the proposed letter, it should change its position 04 the Girard Trust case. most banks. He added that this was just a nuisance matter The thing to avoid was a fuzziness that would indicate that the Board did not know its own position. Governor Mills commented at this point on a broader problem that hadbeen of concern to him for a long time, and increasingly so. Was This that the laws that seemed to present the most perplexing problems Were those enacted in the difficult days of the 1930's with the intent or correcting situations that had developed out of the improper banking Pit'actices. Over the past year or more, he had seen a progressive relaxation Or 1 -aws that had good reason originally, and at a time when the problems that had instigated those laws were the same reasons for which relaxation was r equested. The increasing of maximum permissible rates of interest °11 t itne and savings deposits was an example of what he had in mind. Also, he /14derstood that shortly the System was going to be confronted with denp—, cls from the American Bankers Association for relaxation of Regulation A, l'elatin to discounts for and advances to member banks, the purpose being -g t4) 11, -ake Possible an expansion of banks' lending capacity on the strength of Reserve funds. In the circumstances, he felt that a good case be made for standing pat in Matters of this kind, even if some 44'clehi 4) might be worked on some of the banks involved. In the course of additional discussion of the matter, Governor King 1:)oke 1.11 terms of favoring consistent interpretation of the law and the 19.1 1/16/62 -16- Nssibility of suggesting a change in the law, following which Mr. Hackley said, by way of clarification of his earlier remarks, that he did not l agsrd the proposed letter in the Crocker-Anglo case as constituting in ' arlY sense a relaxation of the present law. It was based on the feeling Of the Legal Division that any other position would go far beyond the Pl'ssent law. Further, while he liked to be precise, it seemed to him that the term "executive officer" was one that almost had to be determined °r1 an ad hoc basis because of variations in the situation at different types of banks; for example, at a small country bank as compared with a lal"ge branch banking system in California. As he had said, he felt that it 14°111d go beyond the present law to take the position that the law was 413Plicable to 100 persons making loans in the consumer credit department. Governor Balderston said he gathered that Governor Shepardson, Gove rflor Mitchell, and Chairman Martin would approve the Crocker-Anglo letter in the form in which it had been drafted. He then indicated that he °Illd join those members of the Board, so that the Crocker-Anglo matter Itlitht be settled on an ad hoc basis. It appeared to him that his desire s°rIe clear-cut boundary line that the bank examiners could use perhaps not be easily realized. Accordingly, the letter to the Federal Reserve Bank of San Francisco roved Governors Mills, Robertson, and King dissenting for the Nts they had stated. A copy of the letter is attached as Item No, 4. All of the members of the staff except Messrs. Sherman and Fauver . g wlthdrew from the meeting. 1/16/62 -17Appointment of director. It was agreed to take the usual steps, through the Chairman of the Federal Reserve Bank of San Francisco, to ascertain whether Clark Kerr, President of the University of California, Be rkeley, California, would accept appointment, if tendered, as Class C director of the San Francisco Bank for the unexpired portion of the threeYeaz term ending December 31, 1964, with the understanding that if Dr. Kerr 11°111d accept, the appointment would be made. The meeting then adjourned. Secretary's Note: Governor Shepardson today approved on behalf of the Board the following items: . Memorandum dated January 11, 1962, from Mr. Kelleher, Director, , 81°n of Administrative Services, recommending that the purchase option air co ement, recently approved by the Board to be made with the I.B.M. t'v°ration in renting the new 1410 computer system, not include the four 4: i 229 magnetic tape units. It was noted in the memorandum that this JuGrl would result in a decrease in the cost of the agreement in the -141t of $1,440. PPr te Letter to the Federal Reserve Bank of Chicago (attached Item No. lng the appointment of John E. Murphy as assistant examiner. Olf • Letter to the Federal Reserve Bank of San Francisco (attached approving the designation of 14 persons as special assistant Lt.riers. 70..0.1) Secret 5) HOARD OF GOVERNORS OF THE Item No. 1 1/16/62 FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD January 16, 1962 Board of Directors, Chemical Bank New York Trust Company, New York, New York. Gentlemen: The Board of Governors of the Federal Reserve System extends to July 23, 1962, the time within which Chemical Bank New York Trust Company, New York, New York, may establish a /2F8.nch at 67 Broad Street, New York) New York, as approved by Lee Board in its letter of July 20, 1960. It is understood that operations at the branch located at 30 Broad Street, !ew York, New York, will be discontinued simultaneously with he Opening of the branch at 67 Broad Street, New York, Aew York. Very truly yours, (Signed) Elizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary. BOARD OF GOVERNORS 04. eow OF THE Item No. 2 1/16/62 FEDERAL RESERVE SYSTEM 0 WASHINGTON 25. D. C. 4 ADDRESS orrscIAL CORRESPONDENCE TO THE BOARD ,s,A4 January 16, 1962 Board of Directors, The Fifth Third Union Trust Company, Cincinnati, Ohio. Gentlemen: The Board of Governors of the Federal Reserve System approves the establishment of a branch at the southeast corner of Glendale-Milford Road and Saint Rita Lane, Evendale, Ohio, by The Fifth Third Union Trust Company, Cincinnati, Ohio, provided the branch is established within one year from the date of this letter. Very truly yours, (Signed) Elizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Item No. 3 1/16/62 WASHUNGTON 25. O. C. ADDRESS arrictAL CORRESPONDENCE TO THE BOARD January 16, 1962 C°101DENTIAL (FR MI'« Thomas M. Timlen, Jr., See reta173 'eCieral Reserve Bank of New York, -ew York 451 New York. t Dear Mr, Tinaen: Reference is made to your letter of January 5, 1962, of a request by Mr. Robert V. Roosa, Under Secretary 'ns Treasury for Monetary Affairs, that the Federal Reserve e 4°f New York make available the services of Assistant Vice Illacid ent Alan R. Holmes to serve as personal assistant to the Secretary during the next several months. 1.eav Your letter advised that Mr. Holmes has been granted a N40.! of absence, with pay, for a period of approximately six 4ph'n commencing on or about January 8, 1962, to accept this 1,44-ntrient. It is noted also that, in this connection, the Bank hot.lassume expenses incurred by Mr. Holmes, including travel, rioClarld subsistence expenses, to the extent such expenses are assumed by the Treasury Department. kr. The Board of Governors interposes no objection to Trea8°41nesl serving in the office of the Under Secretary of the ot , 147 for the period approved by your Directors, on the basis ' rangements outlined in your letter. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. 4 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. Item No, L. 1/16/62 ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD January 16, 1962 John A. O'Kane, "Ico President and General Counsel, ' -Lteral Reserve Bank of San Francisco, 'Jan Francisco 20, California. Dear flr. O'Kane: This is in response to your letter of June 15, 1961, IV-th which was enclosed a letter from Crocker-Anglo National Banks Francisco, California, in which reference is made to the April, 11 °0 ruling of the Board classifying nonofficer employees of a bank pa 'ving lending authority as executive officers within the meaning of gul on 0. The bank requests either a reconsideration of this or a determination as to its applicability to the bank's 100 "flofficer deonrtment managers. ;eati Crocker-Am:lots inquiry concerns (1) automotive finance v-trtment nanacyxs who have authority to make loans secured by a ornotive and other equioment up to a maximum of V70500 on an 1.60motive contract and up to a maximum of 33,000 on a contract or der on a non-automotive equipment contract, and (2) consumer loan -rtnent managers, who have authority to make consumer loans in a thr, 'um amount of It It. is understood that policy standards in 00F;e of automotive loans are fixed by the bank's automotive credit rna'iMlnittee and have to do with minimum down payment or trade-in allowances, coce, model, rate, terms, and the paying capacity of the obligor, and r: ( i ) transactions in excess of the maximum limits or invo1vin,7 deviations zir,1 !standards require prior approval of the automotive credit committee. larly, policy standards in the case of consumer loans are prescribed alicithe bank's consumer loan administration covering purpose, rate, terms, the Timinum qualifications of the borrower, and any loan in excess of ata L'epartment manager's limit or that does not conform with policy thell&ras must be anoroved by the branch manager or a loan officer at cle,"ranch office. Crocker-Anglo National Bank states that these vartment managers exercise no judgment or discretion in performing C1Q'm BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM lir. John A. 01 Kane -2- their functions and that these functions are essentially clerical 414 routine. It is understood also that these department managers , Perform no other duties which night be considered of a managerial nature. The facts as set forth above differ from those considered by the , Board in April, 1960. In that case the employees in question 2ad unlimited discretion to make unsecured loans up to a maximum of y5„000 and secured loans up to a maximum of $10,000. In the present case, although the persons involved may possibly exercise some discretion their decisions are strictly circumscribed by policy standards f, Led by superiors. Accordincay, it is the Board's view that the Crocker-Anglo National Dank dapati:tmLit managers do not participate in the operating LI-lagement of the bank and are not executive officers within the earling of that term as defined in the Board's Regulation 0. Z Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. 0 (.;d't BOARD OF GOVERNORS OF THE Item No. 5 FEDERAL RESERVE SYSTEM 1/16/62 WASHINGTON 25. D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD January 171 1962 Mr. Hugh J. Helmer, Vice President, Federal Reserve Bank of Chicago, Chicago 90, Illinois. Dear Mr. Helmer: In .accordance with the request contained in Your letter of January 10, 1962, the Board approves the aPPointment of John E. Murphy as an assistant examiner for the Federal Reserve Bank of Chicago. Please advise the effective date of the appointment. Very truly yours, (Signed) Elizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary. 4.1 1, BOARD OF GOVERNORS OF THE Item NO. 6 FEDERAL RESERVE SYSTEM 1/16/62 WASHINGTON 25. D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD January 17, 1962 co IDENTIAL (FR) H. E. Hemmings, First Vice President, Federal Reserve Bank of San Francisco, 'an Francisco 20, California. teal' Mr. Hemmings: In accordance with the request contained in your letter of Jarna an,,,arY 9, 1962, the Board approves the designation of the following W'rYeee as special assistant examiners for the Federal Reserve Bank 84 'Jan Francisco for the purpose of participating in examinations of 'ate member banks only: A. E. J. J. Martell M. McLeod R. Phillips L. Secor R. R. R. J. P. W. Ward M. Emerson D. Guymon C. Thygesen B. Wainwright W. W. G. L. M. G. J. F. Ells Horr MacCormac Street The Board also approves the designation of B. D. Simmons as rsPecial assistant examiner for the Federal Reserve Bank of San ; cisco for the purpose of participating in examinations of State cit er banks except The Continental Bank and Trust Company, Salt Lake Y, Utah. 4 Appropriate notations have been made on our records of the t . 0 be deleted from the list of examining personnel heretofore ''''oved for your Bank. Very truly yours, (Signed) Elizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary.
@FedFRASER