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Minutes for To: January 19, 199Q. Members of the Board From: Office of the Secretary Attached is a copy of the minutes of the of the Federal Reserve System on Governors Board of 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, belay 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. Chin. Martin Gov. Szymczak Gov, Mills Gov. Robertson Gov. Balderston Gov. Shepardson r) 47) 77)K, Minutes of the Board of Governors of the Federal Reserve System On Monday, January 19, 1959. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. The Board met in the Board Room at 10:00 a.m. Martin, Chairman Balderston, Vice Chairman Szymczak Mills Robertson Shepardson Mr. Sherman, Secretary Mr. Kenyon, Assistant Secretary Mr. Thomas, Economic Adviser to the Board Mr. Young, Director, Division of Research and Statistics Mr. Johnson, Director, Division of Personnel Administration Mr. Hackley, General Counsel Mr. Masters, Director, Division of Examinations Mr. Molony, Special Assistant to the Board Mr. Noyes, Adviser, Division of Research and Statistics Mr. Sprecher, Assistant Director, Division of Personnel Administration Mr. Solomon, Assistant General Counsel Mr. Hostrup, Assistant Director, Division of Examinations Mr. Hill, Assistant to the Secretary Mr. Fisher, Economist, Division of Research and Statistics had Items circulated to the Board. ----_____ The following items, which 'en circulated to the Board and copies of which are attached to these minutes under the respective item numbers indicated, were 413 t*°Ved UnaniMOUSly: Item No. tetter 4_ Cast,- 'AJ the Lawrence Savings and Trust Company, New the , Pe nnsylvania, extending until July 27, 1959, Shentiraa within which to establish a branch in the thro-atig° Valley Shopping Center. (For transmittal Ilgh the Federal Reserve Bank of Cleveland) 1 1/19 59 -2- Item No. Letter to The Cheboygan State Savings Bank, Cheboygan, bj Zigan, approving the establishment of a full-time 0;:uch in Indian River in lieu of a seasonal banking (For transmittal through the Federal Reserve a.a.nk of Chicago) Legislation (Item No. 3). on januarY 8, 1959 2 Following discussion at the meeting as to what steps, if any, should be taken by the .B°ard with regard to the introduction at this session of Congress of legisla+i ---ve proposals relating to reserve requirements and amendments to th_ Imnk Holding Act, it was understood that Mr. Shay, Legislative vould ascertain whether it would be desirable for the Board to Wite to the Banking and Currency Committees expressing its interest in the - enactment ofsuch legislation. There had novrteen distributed to the Board a draft of letter the Chairman of the Senate Committee on Banking and Currency Teter ring to the report transmitted to the Congress on May 70 1958, ' 4-ng the administration of the 'Bank Holding Company Act of 1956, 'slabs+a difficulties encountered in carrying out its provisions, arid recom mendations for changes in the law. The proposed letter would Xlare es the hope that legislation to carry out the recommendations 1/11ght be introduced during the current session, Aft a brief discussion during vilich minor editorial changes gested, the Board unanimously approved the sending of a letter 2S4 1/19/59 -3- in the form attached hereto as Item No 3, with the understanding that a similar letter would be sent to the Chairman of the House Banking and Currency Committee. In this connection Mr. Hostrup reported that, pursuant to a request made of Mr. Shay by the staff of the House Banking and Ctirren oY Committee, the Division of Examinations was compiling a Ii f cases that would be affected by amendment of the Bank Holding C°mPanY Act to place the definition of a bank holding company on a one-bank basis cases that would be affected by elimination of the exetPtion of charitable and religious organizations, and cases that 14°111d be affected by elimination of the exemption of labor organizations *ell the divestment requirements of the Act. He anticipated that Preliminary data would be available within a few days for submission to Conlmittee Chairman Spence on a confidential basis, following which the 1)ivision would ask the Federal Reserve Banks for verification of the data preparatory to compilation of a statistical table by States. In reply to a question, Mr. Hackley expressed the opinion that i , would not be advisable to defer sending this information to the C°MMittee until after a bill had been introduced. A draft of letter to the Chairman of the Senate Committee on and Currency expressing the desire of the Board that reserve -qui4.-eMent legislation be reintroduced at this session of the Congre 1/19/59 -4- also had been distributed to the Board along with a draft of explanatory statement intended to accompany the letter, which was similar to the statement sent by the Board to the Banking and Currency Committees last year. Mr. Thomas suggested several editorial and more substantive changes in the statement, whereupon it was understood that he and other members of the staff would revise the statement prior to further e°11sideration of the matter by the Board. that the The suggestion as made revisions be held to a minimum to avoid confusion on the part r those making comparisons with last year's statement. Mr. Thomas also stated that he vas in the process of revising last vo. longer background memorandum on reserve requirements in light of the at suggestions made by the Federal Reserve Banks. He suggested --le Board might wish to give copies of that memorandum, which thus r4r had not been distributed outside the System, to the staffs of the 0. and Currency Committees and possibly the American Bankers 488c/ciation. However, in view of questions raised by Governor Mills deci 814n on distribution as deferred pending review by the Board "the revised memorandum. Messrs. Masters, Molony, and Hostrup then withdrew from the nleeting. Mortgage insurance. A revised draft of letter to the Bureau Budget regarding draft legislation which would provide mortgage ?SC 1/19/59 Insurance for nursing homes and neighborhood development programs had been d istributed pursuant to the understanding at the meeting on FridaY, January 16. With respect to the nursing home program Governor Mills sUggested that the language of the current draft seemed to endorse 841 alternative program of grants-in-aid to local agencies, which raised question as to the desirability of such a comment. After discussica r this Point, it was agreed to go no further than to express doubt 8 to whether an underwriting approach of the kind proposed in the 'draft 1 egislation was the most effective one to meet the recognized son4 ' -4 94- need most effectively. With respect to that portion of the proposed letter dealing Ilith ue neighborhood development program, several of the members of the u-vard raised the question whether the Board would not be going beY°11(1. its field of competence if it were to comment on any of the a's.Pectn - of such a program other than the financial aspects. In the light °f these remarks, Mr, Noyes suggested alternative 'wording for the b_ ' 91.ardis consideration. In order that the Board might have an °P.Portunity to study a letter phrased along such lines, it was agreed that d4Other draft of reply to the Budget Bureau would be distributed. the Messrs. Young, Noyes, Hill, and Fisher then withdrew from meeting 1/19/59 -6Appointment of First Vice President at Dallas (Item No 4). In a letter to the Board dated January 9, 1959, which had been circulated Prior to this meeting with a memorandum from the Division of Personnel Admtn istration dated January 13, Chairman Smith of the Federal Reserve 8ank of Dallas advised that, subject to the approval of the Board of G°Itern°rs, the Board of Directors of the Federal Reserve Bank of Dallas haa appointed Harry A. Shuford, Vice President and General Counsel, to ' the 11 4of First Vice President effective March 1) 1959, upon the retirement of First Vice President Gentry, and had fixed Mr. Shuford's aalarv -4 at the annual rate of 322,500. Mr. Shufordls appointment would .11111 ro„ 'the unexpired portion of the five-year term which began March ' l 1956. Following a brief discussion, the Board approved unanimously the Or at PPointment of Mr. Shuford as First Vice President and payment sa, J-arY to him for the period March 1 through December 31, 1959, the annual rate fixed by the Board of Directors. A copy of the tte - Sent to the Chairman of the Dallas Bank pursuant to this action 18 A 44.- as Item No. 4. 211Eement System matte (Item No. 5). A memorandum from the 131111 .13 n of Personnel Administration dated December 24, 1958, which had "kv'en distributed to the members of the Board, called attention to lution adopted by mail vote in June 1958 by the Retirement 2SS 1119/59 -7- C°111mittee of the Retirement System of the Federal Reserve Banks which had. the 'effect of permitting persons under the Bank Flan retained in service beyond age 65 to obtain a vested interest in their retirement benefits without effecting formal retirement. Employees retained in "rvice beyond age 65 had previously had the option of remaining in active service, as defined under the Rules and Regulations of the 4 416 System, or of effecting formal retirement and thereby ' —' seculIng a vesting of retirement benefits. Exercise of the latter °Pti°4 meant that the employee waived for the period of continued "1131°Yment all other rights and benefits under the Rules and Regulations 1-1111-ng the active service death benefit payable by the Retirement SYstem. The third alternative added by the resolution of the Retirement C°1amitt e would have a similar effect except that the employee would be COntinued in "active" service, and he thus would continue to be eligible under the provisions of the group life insurance contract %/ith Con necticut General Life Insurance Company covering certain en1111°Yeee of the Board, the Federal Reserve Banks, and the Retirement 511telll for a death benefit equal to his last 12 months' salary, up to a 1114XiMUM of $20,000. This would produce a special benefit for the 8 mall group of persons who might obtain a vested interest in ' retirement benefits even though still in active service, and 811eh benefit had not been contemplated at the time the group 28,9 1119/59 -8- lite policy was adopted, largely as a result of efforts to equalize its between persons Who might die in "active" service and those 1111° might die after having obtained a vesting of retirement benefits through retirement. The Division of Personnel Administration suggested that the Board might wish to recommend to the Presidents: Conference °4 enlendment of the terms of the group life insurance policy that would nate such coverage in cases where the third alternative was chosen. Following comments by Mr. Sprecher regarding the effect of the re solution adopted by the Retirement Committee, including the elemen+. -- of preference that -would accrue to those choosing the recentlyalternative by virtue of a vesting of retirement benefits coupled CO ntinuation of the group life insurance coverage, the matter was ' -wased by the Board at some length with a view to determining what eclUree of action would appear most appropriate in order to bring about ecIrrection of the apparent inequity. During the discussion, it was 131'°11ght out that except in unusual cases involving retention of an el111°1°Yee beYond age 65, the problem would arise only in the case of Ilsserve Bank Presidents and First Vice Presidents appointed for fiveYear terms of office -which would not expire until after they had passed age 65. T.e. -" vas also brought out that the resolution apparently had beeri ad°Pted without realization on the part of the Retirement Committee that the group life insurance coverage would continue in cases where the th ird alternative was selected. 291) 1119/59 -9At the conclusion of the discussion, it was agreed unanimously t° advise the Chairman of the Presidents' Conference of the Board's request that appropriate steps be taken through the Conference to effeet amendment of the contract with Connecticut General Life Insurance COrnPanY so as to terminate coverage thereunder for any employee under the Be. „„, rlan who continued in service after reaching age 65 and chose to vest -ls h• retirement benefits at age 65 by formal retirement or by other' " —eans. A copy of the letter sent to the Chairman of the Presi- dents" C onference pursuant to this action is attached as Item No. 5. E2112_1noculations for Board employees. reterr d dated Governor Shepardson to a memorandum from the Division of Personnel Administration -nuarY 14, 1959, recommending that the Division be authorized arrangements for a program 'whereby polio inoculations would be Provided for Board employees requesting them, the inoculations would be m" inistered by the Board's nurse, and the cost of the vaccine would be by each employee requesting the service. He stated that in the been, ' e of objection he was inclined to authorize the program on behalf of the Board. to Following a discussion during which reasons were suggested flak-Lig the inoculations available at cost rather than without charge it vas understood that Governor Shepardson would authorize the tilr iei0n of Personnel Administration to proceed in the manner oUtairte d in its memorandum. 291. 1119/59 -10- The meeting then recessed and reconvened at 3:00 p.m. with all of the members of the Board present along with Messrs. Sherman, KerlY°n: Hackley, and Masters. Messrs. Chase, Assistant General Counsel, Benner) Assistant Director, Division of Examinations, and Holahan, 41)ervis°rY Review Examiner, Division of Examinations, also were present. ______Pan_AmericanBank. Pursuant to arrangements that had been tads at his request, Mr. James Sottile, Jr., President of the Pan Atsrican time Bank of Miami, Miami, Florida, met with the Board at this accompanied by General Sterling Wood and Mr. Louis Sedlacek, t0 discuss a program through which the capital of the bank would be augtented. In preparation for this meeting, the members of the Board had been furnished copies of a memorandum from the Division of arainations dated January 19, 1959, summarizing the classifications l'esultillg from the examination of the Pan American Bank as of November ' 3 1958, as compared with classifications resulting from the examination 4144e as of March 31, 1958. The memorandum indicated that the adjusted catlitai - account amounted to 2.6 per cent of total assets and 4.9 percent °f total assets less cash and United States Government securities. The fn -111 for analyzing bank capital or $4.6 as reported to show a deficiency It was stated that the Reserve Bank's letter to Pan km ellean transmitting the report of examination requested the ) 1/19/59 -11- aclditi°n of 33 million of new capital as well as removal of $2 million La d oubtful assets by sale to the bank's holding company, South Dade 4111421 Inc. on a cash basis at the face value of the loans and prior t° anY reduction by charge-off in whole or in part. The bank had been rated J-D-P/4 due to unsatisfactory asset condition) weak management, ahd seriously depleted capital account. General Wood began the discussion with a statement in which he sPoke of efforts made over a period of time to raise capital for the Sottile group of banks, all of which are controlled by South Dade 11118' Inc. He referred to the loan of $14 million extended by Connecticut Miltilea Life Insurance Company to South Dade Farms, Inc., under which the taeurance company reserved the privilege to accept or deny any change in the capital structure of the Sottile banks and said that *ler 'Mr. Sottile first took up with the insurance company the possibility' of increasing the common capital of those banks he was turned tl°144 comPletely. The use of capital notes or debentures was then eUggested and tentative approval was received from the State banking allthorit,_ ) -Les but according to General Wood the plan was discarded becellse the other interested supervisory authorities were not inclined t0 g° along with it. The use of preferred stock was also considered) General Wood said,but the supervisory authorities reportedly were Et1111/ verY reluctant. Mr. Sottile then contacted Glore Forgan & Co., 29„3 1/19/59 -12- erage house in New York City, and conferences subsequently were held bY that firm with Connecticut Mutual Life Insurance Company in an effOrt to work out a plan which would be acceptable to the insurance c°111Pany. At this point General Wood read and submitted for the Board's tileS copies of letters from Glore, Forgan & Co. dated December 30, 1958, 44d januarY 9, 1959, respectively, which indicated that, subject to certain conditions and without making a firm commitment, the firm was telatatively agreeable to making a public distribution of common stock or SoUth Dade Farms. The principal purpose of the financing would be to „, se sufficient funds to provide s8 to $10 million for the present holders of common stock and an additional $12 million for general e°rPorate Purposes. The $12 million, it was understood, would be used t°131.ovide $2 million in additional capital funds for the corporation's barlicirig subsidiaries; to pay off indebtedness of $5 million and thus rilice the debt of the company to that held by the life insurance e°111ParlY; and to provide 35 million for working capital. Conditions to the ux1derwriting were (1) that Arthur Andersen and Co. be engaged to take a complete audit of South Dade Farms, Inc. and its subsidiaries; () that various appraisals of the company's farm lands, ranch lands, 7 3c1 citrus grove be brought up to date and be mutually satisfactory; ) that the terms and conditions of the public offering of common stock (14—:s/ 1/19/59 -13- be satisfactory to the parties concerned and conform to Glare, Forgants contract commitments; and (4) that conditions in the securities Illarket c ontinued to be satisfactory. Cr.!liTni Wood stated that Mr. Sottile was going to have a further eenference with Glore, Forgan and. Co. the day after tomorrow and that the purpose of reauesting this meeting with the Board was to determine /44at questions the Board might have concerning the proposal, which he said had been approved by the insurance company. He estimated that in a Period of 6o to 90 days the arrangements for the underwriting c°t114 be brought to the point of a definite commitment. Mr. Sottile then made a statement in which he first referred to the recent joint examination of all of the banks in the Sottile gr°1-11P a nd said that although the reports of examination of the noninsured banks by the Federal Deposit Insurance Corporation had riot ye t been received, the reports on those banks rendered by the State allthoriti es reflected a good condition. The same thing reportedly was true vith respect to th national banks. As to the Pan American Bank, he said there vas a great difference of opinion between the Federal Re8erlre Bank of Atlanta and the management of the member bank concerning the loan classifications, which raised a question as to how much s'ciditional capital was actually required. With regard to the national '11c1 nonmember insured banks, he said that agreement had been reached 295 1/19/59 -14- ith the national and State authorities concerning how much additional cePital vas wanted for each bank. He further stated that he had offered to ' lilt $1 million of additional capital in Pan American but understood it to be the feeling that this figure should be materially increased. Re hlp+ e "L' referred to the agreement entered into last fall by South Dade Pallas 'Inc. pursuant to which it was to remove $2 million in doubtful "Bets from the Pan American Bank over a period of time, beginning Ex removal of $1 million of such assets on March 31, 1959, and on to Say that he felt it would be better if the commitment could e vithdrawn and whatever additional capital might be required were E`d-clea to the capital structure of the Pan American Bank. It would be --rY d ifficult for South Dade Farms to take out the doubtful loans U4der the commitment, which had as its purpose an indication that 8011th Dade Farms was behind its banks 100 per cent. In the present circumstances, Mr. Sottile said, he would like to suggest putting $2 new capital into Pan American, withdrawing the commitment °II the part of South Dade Farms, and providing a period of six months t° vote an increase in the common stock of Pan American. There ensued discussion of how long it might require to take the vari °us steps pertinent to the proposed program of new financing, e.fter 1111 ich Governor Robertson said that on the basis of a cursory reviev the most recent report of examination of the Pan American 1/19/59 -15- Bank, the proposal to add $2 million to the bank's capital would PPear to be wholly inadequate. Without entering into any discussion of asset classifications, it occurred to him that the objective of the management should be to build the bank's capital structure up to a Poi it 'where the bank could go forward, as he thought it could with hard work on the part of the management. For that purpose, it seemed t° him desirable to go to $3 million, and in fact not stop even there. Mr. Sottile commented that there could be differences of °Pinion r egarding the soundness of certain assets. While he did not to enter into an argument about the classifications and recognized that the bank admittedly had some bad assets, he contended that the 41111agement was working hard on them, that the bank would come out all ritt 111 cases where the loans were secured, and that the vast majority r the 1 (pans happened to be secured. Mr. Sottile also said that with— °f the holding company's commitment would not mean its withdrawal rcy.111 backing of the Pan American Bank in any way. He said that it 110111A 1_ oe beyond his ability at this time to go higher than $3 million Or addi tional capital, that he as not certain whether 453 million mould Proviri eu, but that he was willing to try. He then suggested a ' °Ij1tIr°1114 on $2-1/2 million, with an understanding that the Federal be Rese voUld continue to give as much cooperation as in the past. 1119/59 -16Governor Robertson suggested that this discussion continue On the basis of 3 million additional capital and inquired whether it vas felt possible that within a period of 90 days a firm arrangement vith Clore, Forgan. & Co. could be achieved. When Mr. Sottile replied that he thought a period of 90 days v°uld tell the tale, Governor Robertson inquired about the possibility of shooting for $3 million additional capital provided some leeway Ilere @yen with respect to the commitment of South Dade Farms. Mr. ScIttile indicated that it would not be possible to continue the c0 1414it1lent and at the same time sell additional stock under the arrat gement outlined at this meeting. He also stated that at some 13°Illt he vctiuld want representatives of the Pan American Bank to have °4 oPportunity to discuss the bankts assets with representatives of the Board. It was his view that any losses therefrom would be much arsalaer than anticipated, although it would take time for the loans to vork out. Asked at the $5 million allocated to working capital of 8cnIth Dade parms would be used for, Mr. Sottile replied that it yould be siMPlY a cushion. He again expressed the view that continuation "th e°mmitment on the part of South Dade Farms might destroy the Doesibil ItY Of selling the proposed stock issue and thereby defeat the - 'Die etive of improving the capital position of the Pan American te.4k. 2 918 1/19/59 -17- After some further discussion, Chairman Martin stated to Mr. Sottile that the Board would consider the matter further and advise him of its views. Messrs. Sottile, Wood, and Sedlacek then withdrew from the meeti The discussion continued with Mr. Masters reviewing, at the ehairMan's request, the findings disclosed by the most recent examination elf the p -an American bank. He pointed out that the Atlanta Reserve Bank t 8 letter transmitting the report of examination, which Mr. Sottile "d hiS associates had not yet seen, presented a picture of substantial deteri oration in asset quality and in capital position. Mr. Masters the 4 summarized asset classifications, compared them with classifications "aigned Pieture following the previous examination, and suggested that the seemed considerably more serious than might have been indicated by Mr Sottile's remarks. At this point Governor Mills raised certain questions regarding the eXt it of the Board's responsibility in endorsing a plan for the issur "ee of new shares by South Dade Farms under which purchasers 11111.1t be drawn tristirr lit° an organization whose shares were backed by ent and inadequate assets including an investment in a bank %hose lach 13r°blems, at least at this time, would not have been solved to an extent as to assure the soundness of the institution. 1119/59 -18Mr. Holahan indicated that his own apprehensions about this facet of the matter had been eased somewhat by information received iiirclaallY from the staff of the Securities and Exchange Commission *Itch tended to show that the position of South Dade Farms would be exalliined closely before the new stock issue was approved. Among the that no doubt would be brought out in the investigation of the 144tter 14ou1d be any commitment on the part of South Dade Farms to rezov 'e weak assets from Pan American, which no doubt accounted for the reluctance expressed by Mr. Sottile to have such a commitment in eM-stence. of St ni, °-- In any event, he felt that the attractiveness of an issue of South Dade Farms was certainly a matter open to question In further discussion of the problems confronting Pan American as rev ealed by the latest report of examination, Mr. Masters noted that yice President Denmark of the Atlanta Bank recommended consideration of a section 30 warning and possibly action under section 9 of the Pe deral Reserve Act. In response to a question by Governor Robertson, 14. Mr. -*meters indicated that he also would be inclined to recommend colls4.e ration of such procedures. Rale of After discussion of alternative possibilities) including the certain Sottile real estate or banks, reference Oe " ' ea ItionA -ts comments about the purported reaction of allthort4 "tea to the proposed issuance of preferred stock kria 11°1ahan expressed doubt whether the supervisory was made to the supervisory or debentures, authorities had 30 -11 1/19/59 -19- actU5llY frowned upon the sale of preferred stock. While the authorities had frowned upon the sale of debentures, he said, there was also a Bericus legal question as to whether debentures could be issued under the Provisions of the Florida statutes. At the instance of Governor Mills, members of the examining ataff analYzed the bankts capital position further and expressed doubt idiether it could be said at this time that the capital was actually At this point Chairman Martin observed that the representatives "the bank had submitted a proposal but it was not yet evident 41.sther the Board had any clear counterproposal. Governor Robertson then expressed the view that the problem .°1.11d not be solved by proceedings under either section 9 or section 30, that °• 118ting the bank from the System or removing the management would Plish nothing. In this connection, he called attention to the differences of opinion between the State authorities and the Federal Reser la nk. In a case like this, he suggested that it was best to kee. e• 3certing pressure but take advantage of every opportunity to /)°18ter the institution. As he saw it, it would be preferable to have • million of new capital in the institution and no commitment tr°121 South Dade Farms.holding company was not bound to honor atlY elleh commitment, and even if the commitment were eliminated it 301 1/19/59 -20- Imu1d still be possible to go back to the holding company for assistance riecessarY. Mr. sottile In these circumstances, he would be inclined to tell that the Board wanted to have an additional $3 million Of•caPital provided for the Pan American Bank by whatever means seemed 1313t feasible and within a stated time. • While he did not feel that lion would be enough, at least it would be a substantial step in the right direction. Such a position would not mean in any way that the Board would withdraw from considering section 9 or section 30 111.13ceedings, or in fact any other action that the Board might find it Ileceer. °arY to take in order to bring about correction of the situation. 48 t• ° Protection of parties who might purchase the stock of South Dade 41'may he was inclined to believe that this was more a problem for e Securities and Exchange Commission. Governor Mills said that he would be willing to go along with Such a approach provided the Board made no specific request regarding ilr°1/0 es1 to sell common stock, for he felt that that was the 1)1zeirli -86 of South Dade Farms rather than the Board. the It was then suggested and agreed that it would be .desirable tor Go_ Yernor Robertson to discuss the situation with President Bryan Of the p "Ieral Reserve Bank of Atlanta and for the Board to give an Ver t °morrow morning to Mr. Sottile and his associates. It was 1\1rther suggested and agreed that the Board's answer should be in the 1/19/59 form -21- ... °I a letter in order that there might be no misunderstanding, an 4 -- vas understood that a draft of such a letter would be prepared f" consideration by the Board at its meeting tomorrow. The meeting then adjourned. / A A Secretary • 31), BOARD OF GOVERNORS , 44 l41 401,; 4;' it OF THE * PAW., Item No. 1 1/19/59 FEDERAL RESERVE SYSTEM WO I # WASHINGTON 25, D. C. 4 ti 4 ADDRESS orrociAL CORRESPONDENCE ct*tt TO THE °CARD 444444 ' January 19, 1959. of Directors, Savings and Trust Company, tlew Castle Pennsylvania. Geritlelren2 4441"11Ce Reser Pursuant to your request submitted through the Federal Reser? Bank of Cleveland, the Board of Governors of the Federal Lawrze System extends until July 27, 1959, the time within which Shena ' re Savings and Trust Company may a branch in the ulader tLValley Shopping Center, Shenango Township, Pennsylvania, authorization contained in the Board's letter dated 27) 1958. haR It is noted that construction of the shopping center - not b etrilet , be started, but that the builder expects to start contime t.:,011 this month. If construction is not under way by the inclinextension expires, the Board of Governors would not be ""0 grant a further extension. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. , ?0,1 BOARD OF GOVERNORS OF THE Item No. 2 1/19/59 FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD January 19, 1959. Board of Directors, The Cheboygan State Savings Bank, Cheboygan, Michigan. Ge ntlemen: Pursuant to your request submitted through the Federal Reserve Bank of Chicago, the Board of Governors 0 ;the Federal Reserve System approves the establishment a branch in Indian River, Michigan, by The Cheboygan St _ ate Savings Bank, Cheboygan, Michigan, in lieu of the eration of a seasonal banking office in Indian River t, (3111 June 1 to November 30, each year, as approved by i"e Board of Governors on July 31, 1958. This approval monthgi provided the branch is established within six s from the date of this letter. g Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. BOARD OF GOVERNORS OF THE Item No. 3 1/19/59 FEDERAL RESERVE SYSTEM WASHINGTON OFFICE OF THE CHAIRMAN January 19, 1959 The Honorable J. W. Fulbright, C hairman, Committee on Banking and Currency, United States Senate, W ashington Dear Mr. Chairman: theUnder data of May 7, 1958, there was submitted to President of the Senate and the Speaker of the House of !Presentatives the Board's report pursuant to section 5 of a? Bank Holding Company Act of 1956. The report, a copy of was sent to you with my letter of May 7, 1958, covers _21 administration of that Act, substantial difficulties ' t wilruntered in carrying out its provisions, and recommendaBo ns as to changes in the law which in the opinion of the ard would be desirable. Z The Board hopes that legislation to carry out its vmmendations will be introduced and will be considered by Your A d ommittee during the first session of the 86th Congress. ther of bill incorporating recommendations for changes in ing Company Act of 1956 is set forth in the ' Islicri=i Board as Exhibit A. Your assistance and that of your Committee will be ,Pree• av op lated; and the Board and its staff will be glad to be au possible help in connection with this matter. Man of A letter similar to this is being sent to the Chairttie Committee on Banking and Currency of the House. Sincerely yours, (Signed) Wm. McC. Martin, Jr. Wm. McC. 'lartin, Jr. BOARD OF GOVERNORS of- II 1- Item No. FEDERAL RESERVE SYSTEM 1/19/59 WAS HING TO N OFFICE OF THE CHAIRMAN January 19, 1959. C°41M 22II24_, (FR) Mr- Robert J. Smith, Chairman, Pederol Reserve sank of Dallas, Dallas 2, Texas. Deal' Nr. Smith: appointment Har.The Loard of Governors approves the Federal Of A. Shuford as First Vice President of the Reser 1Y , succeed to 1959, Dallas, effective March 1, Mr term five-year GZt1-4nk for orthe unexpired portion of the wnich beran March 1, 1956of salary to th.. shu r The -koard also annroves payment for the period annum mar., at the rate of ?122,500 per ca 1 throughDecember 31, 1959, Ahich is the rate fixed in your letter of 1,2 auour Board of Directors as reported „ arY Y, 1959. Sincerely yours, (Signed) Win. McC. Martin, Jr. wth. voc. artin, Jr. 4 BOARD OF GOVERNORS 400M4,},4 OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. Item No. 5 1/19/59 ADORESS OFFICIAL CORRESPONDENCE TO THE BOARD January 21, 1959 J. A. Erickson, 'ai il'man, Conference of Presidents, - ederal Reserve Bank of Boston, 131)8t°11 6, M assachusetts. bear Mr. Erickson: The Resolution adopted by the Retirement Committee in June lieser'v-Luch permits members of the Retirement System of the Federal illteire:4Bahks retained in service after age 65 to obtain a vested 1::" in their retirement benefits without effecting formal retireHient . ''Lae been brought to the Boardip attentions As the Resolution permits a nienii3er t%remain new alternative offered by this -ellt ben in active service and at the same time vest his retireelleh a-:elits without the necessity of formal retirement, it appears that , Corlilect:tember continues to be eligible for the life insurance under the th N)loyeleut General group life insurance policy which is provided e Provisi ' 8 of the Federal Reserve Barks. Inasmuch as it appears that immeci waf i . 3 PIxt in °n for Insurance Life General coverage under the Connecticut at:Iely before t° equalize as far as possible the benefits paid on death l( f oillo l' immediately after retirement, it would seem that to continue the effected t,n,• -e insurance coverage, where retirement has been formally tIlia ii-I;nt benefits are purpose of affording assured, would defeat the —Lee Coverage, M the n requeststthat uorlre To correct this inequity, the Board of Governors the c renee of Presidents take the necessary steps to amend the ems J'Ilatiran °nnecticut insurance policy to eliminate retake coverage General group life in cases where employees of Federal Reserve Banks are er in service benefits after age 65 and vest their retirement by f°rmal retirement or by some other means. Very truly yours, Merritt Secre an,
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