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60g Minutes for To: Members of the Board From: Office of the Secretary January 26, 1966 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. Robertson Gov. Balderston Gov. Shepardson Gov. Mitchell Gov. Daane Gov. Maisel 303 Minutes of the Board of Governors of the Federal Reserve System on Wednesday, January 26, 1966. The Board met in the Board Room at 10:00 a.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Martin, Chairman Balderston, Vice Chairman Robertson Shepardson Maisel Sherman, Secretary Kenyon, Assistant Secretary Broida, Assistant Secretary Young, Senior Adviser to the Board and Director, Division of International Finance Mr. Holland, Adviser to the Board Mr. Molony, Assistant to the Board Mr. Cardon, Legislative Counsel Mr. Fauver, Assistant to the Board Nt. Hackley, General Counsel Mr. Brill, Director, Division of Research and Statistics Mr. Farrell, Director, Division of Bank Operations Mr. Solomon, Director, Division of Examinations Mr. Johnson, Director, Division of Personnel Administration Mr. Hexter, Associate General Counsel Messrs. Shay and Hooff, Assistant General Counsel Mr. Irvine, Adviser, Division of International Finance Mr. Daniels, Assistant Director, Division of Bank Operations Messrs. Goodman, Leavitt, and Thompson, Assistant Directors, Division of Examinations Mr. Sprecher, Assistant Director, Division of Personnel Administration Mrs. Semia, Technical Assistant, Office of the Secretary Mrs. Heller, Senior Attorney, Legal Division Mr. Dahl, Chief, Special Studies and Operations Section, Division of International Finance Mr. Ring, Technical Assistant, Division of Bank Operations Mr. Guth, Review Examiner, Division of Examinations Mr. Mr. Mr. Mr. 354 1/26/66 -2Approved letters. The following letters were approved unani- mously after discussion of appropriate background information that had been made available to the Board and clarification of particular points about which members of the Board inquired. Copies of the letters are attached under the indicated item numbers. Item No. Letter to the Federal Reserve Bank of Boston waiving the assessment of penalties incurred bY Valley Bank and Trust Company, Springfield, Massachusetts, because of deficiencies in its equired reserves. 1 Letter to Manufacturers Hanover International Plnance Corporation, New York, New York, granting Permission to purchase shares of Inversiones Abancay S.A., Lima, Peru. 2 Letter to the Under Secretary of the Treasury or Monetary Affairs requesting the views of the Treasury Department with respect to the becember 1, 1965, report of the Treasury-Federal Reserve Ad Hoc Coin Committee. 3 ,1!etter transmitting to the Secretary of the :ederal Advisory Council a list of topics ,liggested for discussion at the meeting of 'le Council on February 14-15, 1966. 4 ' Itetter to the New York State Superintendent of anks indicating that the Board would be pre1/tared to act on applications for branch offices be opened "in the immediate neighborhood" a specified location subsequent to approval t such applications by the State Banking 1.°4rd but prior to the issuance of the autho14ati0n certificate by the Superintendent. 5 ilietter to the Central Bank of the Argentine pePublic, Buenos Aires, Argentina, regarding m:deral Reserve participation in the Eighth Al-heting of Technicians of Central Banks of the oierican Continent and Ninth Operating Meeting the Center for Latin American Monetary Studies 6 1/26/66 -3Item No. Letter to the Federal Reserve Bank of Cleveland approving the appointment of Albert W. Nuske as Alternate Assistant Federal Reserve Agent. 7 Letter to the Federal Reserve Bank of Minneapolis aPProving payment of salaries to Howard L. Knous as Vice President and to Leonard W. Fernelius as Assistant Cashier at rates fixed by the Bank's Board of Directors. 8 Letter to Chairman Robertson of the Senate Cohunittee °n Banking and Currency regarding additional organizations that apparently would become subject to the Bank Holding Company Act if S. 2353, containing a "one-bank" definition, were enacted. 9 Letter to the Comptroller of the Currency agreeing to furnish data he had requested on individual national bank borrowings from the Federal Reserve Banks, and equesting that reports of examination of national °anks given certain ratings be furnished promptly to cederal 44 Reserve Banks by Regional Comptrollers of the u rency; letter to the Federal Reserve Banks in this tegard. 10-11 With respect to Item No. 9, it was understood that the staff ' 7°111..d undertake an analysis, along lines Governor Maisel suggested, of the replies to the Board's survey with a view to developing information tha "might be helpful to the Board in studying relationships between 4"banking organizations and the banking system. All members of the staff then withdrew except Messrs. Sherman, 4 . 4Yon, Hackley, Farrell, Solomon, Johnson, and Sprecher and Mrs. Semia. Lpplement to retirement allowance (Item No. 12). In a circulated irleill°randum dated January 11, 1966, the Division of Personnel Administrati "inquired whether the Board wished to suggest that the Board of Dir _ c.tor s of the Federal Reserve Bank of Atlanta consider the possibility Of entering into a contract under which supplemental retirement benefits 356 1/26/66 -4- would be paid by the Bank to President Patterson. The memorandum men- tioned other cases in which contracts had been entered into whereby Presidents with relatively short service were guaranteed minimum retirement allowances equal to 40 per cent of final salary if they completed at least 10 years of service, the difference between the amount of such an allowance and the amount payable under the Retirement System of the Federal Reserve Banks being paid directly by the Federal Reserve Bank concerned. Attached to the memorandum was a draft of letter to the Chairman °f the Atlanta Reserve Bank that would state that the Board was prepared to consider a similar arrangement in the case of Mr. Patterson if recommended by the Atlanta Board of Directors. A copy of the form of contract that had been used in other similar cases accompanied the draft letter. In discussion question was raised whether this type of contractual arrangement was intended to apply only to Reserve Bank Presidents who were brought in from outside and therefore had in prospect only a relatively short period of System service, or also to Presidents who were promoted from within. Response was made that, although most of the contracts entered into since 1959 were designed to meet a problem with respect to appointees from outside the System, partly in recogni"of their loss of retirement equity in previous employment, similar ti contractual arrangements had been approved for certain Reserve Bank Presidents with prior System service. Comment was made that it would seem inappropriate to make such an arrangement in order to attract 4Pp ointees from outside the System and not accord like treatment to a 35°‘ -5- 1/26/66 President who had been promoted from within the Bank, and there was general agreement with this comment. The letter to the Federal Reserve Bank of Atlanta was then unanimously. A copy is attached as Item No. 12. The meeting then adjourned. Secretary's Notes: Attached as Item No. 13 is a copy of a telegram sent today to the Federal Reserve Agent at Atlanta authorizing the issuance to United Bancshares of Florida, Inc., Miami Beach, Florida, of a limited permit to vote its stock of Central First National Bank of Coral Gables, Coral Gables, Florida. Governor Shepardson today approved on behalf of the Board the following items: Letter to English Language Services, Inc., Washington, D. C., con4-1rming arrangements for a course in Conversational Spanish for members °f the Board's staff as an activity of the Board's Employee Training and Development Program, a fee of $7 to be paid for each session conducted. Memoranda recommending the following actions relating to the Board's staff: 1511.12aL 1!T_Z9ir . StatisCharlene Gail Roberts as Secretary, Division of Research and 1, February effective with basic annual salary at the rate of $8,009, 1966. t. Salar increase , Susan R. Clark, Statistical Clerk, Division of Data Processing l Statistica to r°m $5,694 to $6,086 per annum, with a change in title ! s istant, effective January 30, 1966. " 358 , 1/26/66 -6- Lry_nsfer Phyllis Carson, from the position of Secretary in. the Division of Administrative Services to the position of Secretary in the Division of Research and Statistics, with no change in basic annual salary at the rate of $5,181, effective January 31, 1966. 359 BOARD OF GOVERNORS Item No. 1 OF THE 1/26/66 FEDERAL RESERVE SYSTEM WASHINGTON, D. C. 20551 ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD January 26, 1966 E. 0. Latham, Firsti Vice President, Pederal Reserve Bank of Boston, 130ston, Massachusetts. 02106 IDellr Mr. Latham: This refers to your letter of January 14, 1966, regarding the rr, Penalties totaling $4,133.95 incurred by the Valley Bank and rust Company, Springfield, Massachusetts, on deficiencies in its ; required reserves for nine of the ten biweekly computation periods l cim July 22 to December 8, 1965. ' It is noted that (1) these deficiencies were discovered the ng the course of a recent examination of the bank; (2) during ta above -mentioned reserve computation periods, errors had been orae by the general ledger bookkeeper in connection with the interice account for shipments of cash in transit between offices el- the bank, with the result that the amounts reported as vault ' tash for reserve purposes were overstated progressively; (3) your tlInk believes that the overstatement of vault cash was due entirely 0clerical errors of which the bank management was unaware; 0° the bank previously has had an excellent record of maintaining re qUired reserves; and (5) the penalty of $61.22 for the period e '13 ' :_laed August 4, 1965, can be waived by your Bank under the Board's uistructions (S-1123, F.R.L.S. #6120). In the circumstances, the Board authorizes your Bank to assessment of the remaining penalties of $4,072.73 for reserve computation periods from August 19 to December 8, 1965. the Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. 360 Item No. 2 1/26/66 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON, D. C. 20551 ADDRESS orriciAL CORRESPONDENCE TO THE BOARD January 26, 1966. Ilanufacturers Hanover International Finance Corporation, 44 Wall Street, New York 15, New York. Gentlemen: As requested in your application of December 14, 1965, the Board of Governors grants consent for your Corporation to purchase and hold approximately 4,000 shares, par value Peruvian Soles 0010 each, of Inversiones Abancay S.A., Lima, Peru, at a cost of 4AProximately US$150,000, provided such stock is acquired within °fle year from the date of this letter. The foregoing consent is given with the understanding that the investment now being approved, combined with other forti-gn loans and investments of your Corporation and Manufacturers "anover International Banking Corporation, will not cause the total of such loans and investments to exceed the guidelines established under the voluntary foreign credit restraint effort now in effect and that due consideration is being given to the priorities contained therein. Very truly yours, (Signed) Karl E. Bakke Karl E. Bakke, Assistant Secretary. 361_ Item No. 3 1/26/66 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON OFFICE OF THE CHAIRMAN February 1, 1966 The Honorable Frederick L. Deming, Under Secretary of the Treasury for Monetary Affairs, Treasury Department, Washington, D. C. 20220. Dear Fred: This refers to the report dated December 1, 1965, of the joint Treasury - Federal Reserve Ad Hoc Coin Committee. It is understood that copies of this report were previously furnished to you and other Treasury representatives, as well as to the Conference of Presidents and the Board. For convenient reference, a listing of the recommendations in the report is enclosed. On December 13, 1965, the Conference of Presidents approved the recommendations in this report with the following at exceptions. The Conference reaffirmed the positions taken its September 27, 1965, meeting with respect to distribution Procedures, namely, that (1) the Conference does not see any net gain in proposing any change in the distribution procedures at the present time in view of the likelihood of the coin shortage being improved in 1966, and (2) the Reserve Banks should in but Principle accept coin orders direct from nonmember banks time this that this requirement should not be made mandatory at equitable because such action would aggravate the problem of d lstribution of coin among the commercial banks. The Board concurs in the actions taken by the Conference of Presidents with respect to the recommendations made by the Ad Hoc Coin Committee. In considering this matter the Board noted that, while some of the recommendations call for action all mainly on the part of the Reserve Banks or the Board, nearly Treasaffect y indirectl or Of the recommendations would directly further action, ury operations. Accordingly, before taking any with Treasury the of views the Board would like to have the rly particula would and report, respect to the Ad Hoc Committee in steps further to as ns suggestio appreciate any comments or this matter. Sincerely yours, (Signed) Bill Wm. MCC. Martin, Jr. Enclosure. 362 RECOMMENDATIONS IN THE DECEMBER 1, 1965, REPORT OF JOINT TREASURY - FEDERAL RESERVE AD HOC COIN COMMITTEE Inventory Reports 1. With respect to Federal Reserve Banks and Branches, the existing at the end of arrangement be continued under which coin holdings to the Mint, ed report are month each each week and at the end of coin reg showin data ing includ With the monthly reports also of rationdegree the on ts commen ceipts and payments, as well as desired when and if r, howeve on, additi ing by Reserve Banks. In nt pursua banks cial commer from ed inventory holdings are obtain should ements arrang on, endati recomm to the immediately following be made to obtain comparable figures from the Reserve Banks and Branches. 2. System With respect to commercial banks, the Federal Reserve ements arrang p develo to ted reques be tee Research Advisory Commit under which-(a) (b) All weekly reporting member banks would submit as special reports showing, by denominations, amount of the last Wednesday of each month the level of coin on hand and the desired inventory at that time of year. each A representative sample of smaller banks in banks) member rably Federal Reserve District (prefe would group ing report not included in the weekly report the same information. 3. ment stores, With respect to large users of coin (such as depart e, etc.), servic ng wrappi ing provid supermarkets, armored carriers be asked to tee Commit ry Adviso ch Resear the Federal Reserve System Reserve Districts a study the feasibility of setting up by Federal provide on a continuing sampling reporting arrangement that would denominations, coin holdings monthly basis data that would show, by the "on and desired inventory and that would be representative of hand" or "float" needs of large users of coin. 4. Copies of the reports suggested above be furnished to the Bureau ions. of the Mint and the Board's Division of Bank Operat 363 -2- Hoarding 1, The Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Federal Reserve Board be asked to make arrangements under which, as part of every bank examination, a separate report would be submitted to the appropriate Federal Reserve Bank showing for the bank being examined the number of loans collateraled by silver dollars and other coin, and the amount of coin so pledged by denomination. 2. The Treasury consider hiring an outside research group to develop and carry out a proposal for sampling coin dealers and collectors for the purpose of obtaining a representative indication of their holdings. Coins in Circulation The Treasury continue its study of sampling techniques to improve statistics on coin in circulation, and the Federal Reserve Banks and the Board stand ready to lend any assistance the Treasury may desire in this undertaking. Production Planning 1, The Bureau of the Mint investigate and develop a long-range Planning program based on sound statistical techniques. The Federal Reserve Banks develop a procedure under which each Bank would submit to the Board's Division of Bank Operations (a) in April of each year a preliminary estimate showing the coin needs for its District, by denominations, for each of the next two calendar years broken down by quarters, and (b) in August of each year furnish any revisions that may be appropriate in the April figures. 3. 4. The Division of Bank Operations coordinate these figures on a System-wide basis and furnish them to the Mint in May and August of each year for advisory purposes. A Permanent Treasury - Federal Reserve liaison committee be appointed to review proposed production before firm estimates are submitted to Congress. -3- Distribution 1. The Mint, for purposes of making its coin allocations among the Federal Reserve Banks and Branches, (a) take into account the degree of rationing at the different Federal Reserve offices, as now shown on the monthly reports to, the Mint on Form 9000; and (b) obtain from each Federal Reserve office a mid-month report showing, by denominations, coin receipts desired from the Mint during the next calendar month. 2. The Board consider the desirability of asking the Presidents' Conference to adopt, in the Cash Circulars of the Reserve Banks, uniform paragraphs covering coin service to nonmember banks, With a view to eliminating any provisions that discriminate against nonmember banks other than those that have to do with absorption of shipping charges and risks. 3. Treasury Circular No. 55 be revised to delineate specifically between responsibilities of the Treasury and the Federal Reserve Banks with respect to the distribution of coin, and to eliminate the prohibition against paying out new coin when circulated coin is available. Storage 1. Long-range production planning by the Mint include provision for a backlog of coin beyond current needs. Minimum holdings, by the Mint and Federal Reserve Banks together, for this purpose are recommended as follows: cents--three months' supply; nickels--six months' supply; other coins--one year's supply. 2. The "supply" used in such planning goals be based on the Reserve Banks' gross payments less their receipts from circulation, and on inventory data reported by Reserve and commercial banks. 3. The Mint make a survey of storage possibilities available to it (such as the Assay Offices, West Point, and Fort Knox); that such survey include data showing the bag capacity of the space available and transportation and other costs involved in utilizing such space; and that these data be coordinated with similar data previously compiled by the Federal Reserve Banks and Branches. -44. The Treasury and the Federal Reserve System work out an agreement under which, in building up an inventory backlog-(a) The Mint will be basically responsible for the storage of new coin and the Reserve Banks will be basically responsible for the storage of circulated coin. (b) Supplies be built up first at Reserve Banks, next at the storage space under Mint control, and finally at other points if necessary; and if space outside of the Federal Reserve Banks and of Mint control is necessary, the Mint and the Federal Reserve System work out an agreement as to appropriate sharing of the rental cost. 5. The Mint bear any transportation costs resulting from its request to move part of the inventory backlog from one Federal Reserve Office to another. 6. Any reflow of coins to Reserve Banks beyond inventory needs be removed from current inventories and stored in dispersal areas until there is an adequate stock for a national emergency. Miscellaneous Items 1. A policy be adopted under which rebagging and mixing of a specific denomination of coin will be continued by the Reserve Banks only as long as any Reserve Bank is rationing such coin. The Federal Reserve Banks continue to accept deposits of wrapped coin and pay shipping charges on receipts from nonmember banks until an ample supply of coin is generally available. A policy be adopted under which persons with particular knowledge of the coin situation would be very careful in volunteering any information about it and equally careful about the implication that might be drawn from replies to responsible inquiries. The Treasury consider re-establishing a numismatic service as soon as possible in order to realize the revenue that would come from such a service and to provide collectors with proof sets and possibly other new coin. 36G BOARD OF GOVERNORS Item No. 4 1/26/66 OF THE FEDERAL RESERVE SYSTEM • WASHINGTON, D. C. 20551 • • AC/DRESS OFFICIAL CORARIBPONCENCE TO THE COARD January 26, 1966. AIR MAIL Mr. Herbert V. Prochnow, Secretary, Federal Advisory Council, 38 South Dearborn Street, Chicago, Illinois. 60690 Dear Herb: The Board of Governors suggests the topics shown Ott the attached list for discussion at the meeting of the Federal Advisory Council on February 14, 1966, and the joint meeting of the Board and the Council on February 15. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. Attachment 'Of Topics for Discussion at Meeting of Federal Advisory Council February 14-15, 1966 Economic conditions and prospects. A. economic activity How does the Council appraise prospects for of 1966? half first the and for industrial prices during B. Have Council members observed any significant changes in busiories in ness plans for additions to capacity or to invent now ations expect t buoyan more response to the generally prevalent? Banking developments. A. What does the Council anticipate as demands for bank credit in relation Is it anticipated that an unusually demands will be in the form of term B. C. 0. to near-term business to usual seasonal needs? large proportion of these loans? taken place How much tightening of bank lending policies has extended ning since last fall? To what extent has such tighte turnactual to reductions in amounts of loans granted or to downs or deferrals of loan applications? and willHow have recent developments affected the ability ? market CD ingness of banks to attract funds in the ing the Do members of the Council have any comments regard by the ced announ Q and D proposed amendments to Regulations define effect in would Board on January 20, 1966, that tions as including "deposits" for the purposes of those regula indebtedness of of forms other promissory notes and certain member banks? Balance of payments. A. foreign demand How does the Council appraise the strength of for U.S. bank funds? B. Have the Council's views on the effectiveness of the voluntary d materially since the foreign credit restraint program change Council met with the Board in November? What are the Council's views on monetary and credit policy under current circumstances? 368 Item No. 5 1/26/66 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON, D. C. 20551 ADDRESS orricIAL CORRESPONDENCE TO THE BOARD January 26, 1966. Mr. Frank Wille, Superintendent of Banks, New York State Banking Department, 100 Church Street, New York, New York. 10007 Dear Mr. Wille: This refers to your letter of January 19, 1966, regarding applications for branches by State member banks in New York. You state that the New York State Banking Department proposes to accept applications for branch offices which may be opened "in the ent of immediate neighborhood" of a specified location. The establishm of dent Banks Superinten a branch office must be approved by the State and also by the State Banking Board. Following such approvals, and the satisfaction of any conditions precedent which may have been imposed by the Banking Board, the Superintendent issues an authorization certificate; and in cases of the kind here described, the specifics as to actual site location would be required to be supplied prior to issuance of the authorization certificate. respect to such In issuing an authorization certificate with would interpret the Department Banking applications, the New York State that the manner same the in od" neighborho Phrase "in the immediate ) 208.8(b)(7 Section in phrase that Federal Reserve System interprets of change a location whether g determinin of of Regulation H for purposes branch by a State does or does not constitute the establishment of a new an authorizaissue would dent Superinten York member bank. Thus, the New tion certificate only if the site selected were in the immediate neighborhood of the location stated in the application and would not affect the nature of the business intended to be done or the customers intended to be served. would be prepared to You ask whether the Board of Governors Banking Board approval i et upon the application subsequent to the State l e by the New York certificat ,,t1t Prior to issuance of the authorization would be promptly Board the 11Perintendent, with the understanding that ' "tilled of the specific premises to be occupied. 41 OT4, Mr. Frank Wille -2- The Board will be glad to consider and act upon applications for branches in the circumstances you describe subsequent to approval by the New York Banking Board but prior to the issuance of the authorization certificate by the New York Superintendent. Very truly yours, Merritt Sherma Secretary '70 BOARD OF GOVERNORS Item No. 6 1/26/66 OF THE FEDERAL RESERVE SYSTEM WASHINGTON OFFICE OF THE CHAIRMAN February 1, 1966. AIR MAIL The Honorable Felix Gilberto Elizalde, President, blic, Central Bank of the Argentine Repu Buenos Aires, Argentina. Dear President Elizalde: receipt of your I am pleased to acknowledge meeting of Central Bank invitation to the forthcoming Continent and the Ninth Technicians of the American for Latin American Operating Meeting of the Center next November. I Monetary Studies, both to be held e agenda you have set also appreciate the comprehensiv ling administrative forth and the schedule for hand details. rve System, On behalf of the Federal Rese We will be on. tati invi am pleased to accept your the with ce rdan acco in further communication in , please time mean the In schedule you have set forth. accept my best wishes. Sincerely yours, WW1. McC, Martin, Jr. 37:1 BOARD OF GOVERNORS Item No. 7 1/26/66 OF THE FEDERAL RESERVE SYSTEM WASHINGTON, D. C. 20551 ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD January 26, 1966 Mr. Joseph B. Hall, Chairman of the Board and Federal Reserve Agent, Federal Reserve Bank of Cleveland, Cleveland, Ohio 44101. Dear Mr. Hall: January In accordance with the request contained in your letter of 13, 1966, the Board of Governors approves the appointment of Albert W. Nuske as Alternate Assistant Federal Reserve Agent at ‘41e Federal Reserve Bank of Cleveland to succeed Mr. Clarence J. Goudreau. This approval is given with the understanding that Mr. Nuske be solely responsible to the Federal Reserve Agent and the Board c‘j14 Governors for the proper performance of his duties, except that, vilring the absence or disability of the Federal Reserve Agent or a DlIteallaY in that office, his responsibility will be to the Assistant 'ederal Reserve Agent and the Board of Governors. When not engaged in the performance of his duties as Alternate ti„ stant Federal Reserve Agent, Mr. Nuske may, with the approva l of 8"e Federal Reserve Agent and the President, perform such work for the p4hk as will not be inconsistent with his duties as Alternate Assista nt ederal Reserve Agent. 183i It will be appreciated if Mr. Nuske is fully informed of the %111 ' cl0rta 1ce of his responsibilities as a member of the staff of the tr eral Reserve Agent and the need for maintenance of independence °M the operations of the Bank in the discharge of these responsibilities. Please have Mr. Nuske execute the usual Oath of Office which be forwarded to the Board of Governors along with notification 'he effective date of his appointment. ehota, ot LL Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. 372 Item No. 8 1/26/66 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON, D. C. 20351 ADDRESS orriciAL CORREOPONDIENDB TO THE BOARD January 26, 1966 CONFIDENTIAL (FR) Mr. Hugh D. Galusha, Jr., President, Federal Reserve Bank of Minneapolis, Minneapolis, Minnesota. 55440 Dear Mr. Galusha: The Board of Governors approves the payment of salaries to the following officers of the Federal Reserve Bank of Minneapolis for the period March 1 through December 31, 1966, at rates indicated, which are those fixed by your Board of Directors as reported in your letter of January 13. Name Howard L. Knous Leonard W. Fernelius Annual Salary Title Vice President Assistant Cashier $15,000 11,500 The Board has noted the early retirement of Vice President Gillette. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM 9, 9 Item No. 9 1/26/66 WASHINGTON . 4 ' 44 v„ OFFICE OF THE CHAIRMAN February 2, 1966. The Honorable A. Willis Robertson, C hairman, Committee on Banking and Currency, United States Senate, Washington, D. C. 20510 Dear Mr. Chairman: The enclosed list, which shows 586 organizations that would aPParently become bank holding companies if S. 2353 were enacted, was PrtePared--with the few exceptions noted below--from replies to the Board's 'ent survey. In most cases, the organizations listed are corporations 4"at own 25 per cent or more of the stock of one bank. Also covered are few long-term trusts, some of which are for charitable or educational urPoses, and some of which are pension or profit-sharing trusts for 44, 310yees, and a few organizations that are neither corporations nor 'lista, but would be covered as "similar organizations" under the definition of "company" in the Bank Holding Company Act. j : While the response to our survey was excellent (more than ,95 Per cent of all commercial banks responded), and the list should, thereLore th a be reasonably complete, it undoubtedly omits some organizations noat would be covered by the bill. Presumably some were missed due to a few instances where 4 1,1teSPOnse •to the survey, which was voluntary. In the Board under with file seuank had not responded, applications on names of organizathe contained tiction 301 of the Banking Act of 1935 these have been stock; bank's 4,°" owning 25 per cent or more of the "ued to the list. The survey revealed over 300 instances in which it is possible bank, but in A,' a trustee holds 25 per cent or more of the stock of a whether a trust determine to insufficient h the information given was the under bring it would terms its covfact exists or if it does whether example, for instances, many In legislation. th "'age of the proposed i$ehreturn simply indicates that 25 per cent or more of a bank's stock is :1_eld by an estate. In other cases, the return shows that the stock ueld in trust for the benefit of designated persons, without indicating that ti 74 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM The Honorable A. Willis Robertson -2- the trust will terminate. The indications are, however, that the gtreat bulk of these cases would not be covered by the proposed legislati011, either because no trust is involved or because it is a "familyITe trust, and so exempt. They are therefore omitted from the list. Thirteen voting trusts were reported, but have not been included the list. In four instances, the return indicated that the trust would eoliTire well within the 25-year limit for exemption. Seven of the nine i rer voting trusts reported are in States that limit such trusts to ,v years. In the case of pension or profit-sharing trusts, we have assumed, even where the return did not so indicate, that the trust would be perpetual, as is typical for this kind of trust. Several returns were received, indicating that partnerships (3 4 25 per cent or more of the stock of a few banks. These are not in4 s.uded in the list, partly because partnerships would not be covered by vo 2353, and partly because we were concerned whether including them thlild in some instances be construed as a breach of confidence; banks that reported holdings of individual stockholders had been assured that o_aee holdings (as opposed to holdings of corporations, trusts, or other RA nizations) would be kept confidential. In some cases, partnerships 0 111 clearly to fall in the category of business organizations, but in : "ler cases they do not. 4 A list of the holding companies that are now registered with Board under the Bank Holding Company Act of 1956 is also enclosed. Sincerely yours, (Signed) Wm. McC. Martin, Jr. Wm. McC. Martin, Jr. sures • •• • t• ,*. . GOtet 0. t% •.0 BOARD OF GOVERNORS Item No. 10 1/26/66 OF THE FEDERAL RESERVE SYSTEM WAS • .PALRe$ OFFICE OF THE CHAIRMAN January 26, 1966 The Honorable .James J. Saxon, Comptroller of the Currency, 20429 Washington, D. C. Dear Jim: The Board will furnish your Office the current data on individual national bank borrowings from the Federal Reserve Banks requested in your letter of January 13. These data will become available on a continuing basis from machine language records beginning near the end of weekly this month. From that point we will be able to furnish for listings of national banks showing daily average figures on tion borrowings and required reserves with coded informa the number and ons, ficati classi y maturit eral, types of collat Present weeks. of periods indebted in the most recent 12 or 13 to 10 7 a with le plans call for this information to be availab day. Wednes day lag after the weekly period ending on be Arrangements for transmitting these listings may ns any questio discuss may made at the staff level. Your staff Jr., ra, Veenst A. T. with relating to the data or arrangements n of Data Processing. Chief, Financial Statistics Section, Divisio in In order to assist the Federal Reserve System it l banks, nationa ng regardi obtaining necessary information l ller Regiona Comptro each direct will be appreciated if you will Bank Reserve Federal iate appropr of the Currency to supply the copy of each report of promptly on a continuing basis with a a Composite rating of given bank l examination of each nationa 3 or 4. Sincerely yours, (Signed) Bill Wm. McC. Martin, Jr. 376 BOARD OF GOVERNORS Item No. 11 1/26/66 OF THE FEDERAL RESERVE SYSTEM WASHINGTON, D. C. 20551 ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD January 26, 1966. Dear Sir: Attached for your information is a copy of a letter from the Comptroller of the Currency dated January 13, 1966, and a copy of the Board's reply under today's date. You will note that the Board's reply, among other things, requests the Comptroller to have the Regional Comptrollers of the Currency supply the Reserve Banks with a copy of each report of examination of each national bank given a composite rating of 3 or 4. Please arrange with the obtain appropriate Regional Comptroller of the Currency to advise and copy, per $100 of these reports at the usual price n. operatio the Board when the arrangements are in Very truly yours, 41/AAAA.A.A.A Merritt Sherman, Secretary. Attachments. TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS 1)1Alfrd e BOARD OF GOVERNORS I Item No. 12 1/26/66 OF THE FEDERAL RESERVE SYSTEM WASHINGTON, D. C. 20551 ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD January 26, 1966 CONFIDENTIAL (FR) • Mr. Jack Tarver, Chairman of the Board, Federal Reserve Bank of Atlanta, Atlanta, Georgia. 30303 Dear Mr. Tarver: As you know from the action taken on Mr. Bryan's case, the Board of Governors has approved arrangements entered into by several a Federal Reserve Banks wherein the particular Bank guarantees to of final salary cent per 40 of allowance recipient a minimum retirement less not than ten has recipient the provided after attainment of age 65 System Retirement Reserve Federal the under Years' service creditable and is serving as President of that Bank at the time of retirement. The Board is prepared to give consideration to a similar agreement in the case of Mr. Patterson if recommended by your Board of Directors. For the purpose of placing such a proposal in effect there are enclosed three copies of an Agreement, which has been used With certain other Reserve Banks, which may be executed by Mr. Patterson and the Federal Reserve Bank of Atlanta. If you and Mr. Patterson will of the Board of execute such an Agreement in triplicate, the Secretary original and Governors will affix his signature and will return the Patterson. one copy to you for your records and that of Mr. should To illustrate some of the provisions of the agreement, age reaching 65, and on Mr. Patterson retire as President on May 16, 1968, total a minimum guaranteed assuming his present salary rate, he would be the Retirement Sysallowance of $14,000. His retirement allowance from tem of the Federal Reserve Banks (pension and annuity) would approximate $12,950,and about $1,050 would be payable by the Federal Reserve Bank of minimum allowance Atlanta to make up the $14,000 figure. This guaranteed than 65 by earlier would be adjusted downward for retirement at any age at the System Retirement the pension reduction formula applicable to the Bank by the payments t time of his earlier retirement. The post-retiremen wife. his to payments would cease at his death, with no provision for Mr. Patterson would not contribute to the supplemental allowance, which would be paid from Bank funds. 378 Jack Tarver -2- In addition to the benefits he would receive under the guaranteed minimum allowance agreement, Mr. Patterson would also be entitled to Social Security benefits at age 65. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. Enclosure. 379 For and in consideration of the mutual promises of each Party hereto, this Agreement is entered into between HAROLD T. PATTERSON and the FEDERAL RESERVE BANK OF ATLANTA, ATLANTA, GEORGIA. Subject to all of the applicable provisions of law, HAROLD T. PATTERSON agrees to serve as an officer of the said FEDERAL RESERVE SANK as long as such service shall be mutually agreeable to the parties hereto. For and on account of such service, said FEDERAL RESERVE BANK Shall pay said HAROLD T. PATTERSON as follows: (1) Said FEDERAL RESERVE BANK shall pay to said HAROLD T. PATTERSON a salary at the rate of $35,000 per annum during the period ending December 31, 1966, and thereafter during his service as an officer of said FEDERAL salary RESERVE BANK and prior to his retirement his accordshall be as determined from time to time in ance with applicable provisions of law; said HAROLD T. (2) If, having attained the age of 65, than 10 years PATTERSON shall retire with not less ent System of of service creditable under the Retirem President of the Federal Reserve Banks, and if he is of his retiresaid FEDERAL RESERVE BANK at the time pay to said ment, said FEDERAL RESERVE BANK shall retirement and during HAROLD T. PATTERSON after such 380 the remainder of his lifetime an amount per annum which, together with his regular retirement allowance under the Retirement System of the Federal Reserve Banks (without regard to optional benefits or conversion, or additional voluntary contributions), will aggregate a sum equal to 40 per cent of the annual salary being paid to him at the time of his retirement; and (3) If, without having attained the age of 65, said HAROLD T. PATTERSON shall retire with not less than 10 years of service creditable under the Retirement System of the Federal Reserve Banks, and if he is President of said FEDERAL RESERVE BANK at the time of his retirement, the aggregate sum equal to 40 per cent of salary referred to in the preceding paragraph (2) shall be reduced by the application of the then current table of pension reduction factors of the Bank Plan of the Retirement System of the Federal Reserve Banks, and the portion of the aggregate that is payable by said FEDERAL RESERVE BANK shall be the difference between the dollar amount represented by such lesser percentage of salary and the regular retirement allowance payable at the attained age by said Retirement System. 381 This Agreement does not obligate the said HAROLD T. PATTERSON to remain as an officer of the said FEDERAL RESERVE BANK, and does not constitute an Agreement by the said FEDERAL RESERVE BANK or the Board of Governors of the Federal Reserve System that he will continue in such capacity; it does not obligate the said FEDERAL RESERVE ILIft to appoint reappoint, or continue him as an officer, nor does it Obligate the Board of Governors of the Federal Reserve System to approve his appointment or reappointment or his compensation. Witness our hands and seals this day of 196, HAROLD T. PATTERSON FEDERAL RESERVE BANK OF ATLANTA By Chairman of Board of Directors Attest: soretary, Board of Directors Board o The above Agreement has been approved by the . Qcvernors of the Federal Reserve System and in witness thereof, the has affixed his "41 of the said Board is attached and its Secretary signature. (Date) Secretary • 382 TELEGRAM Item No. 13 1/26/66 LEASED WIRE SERVICE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON January 26, 1966. 14474 -- ATLANTA 1 (44 A. united Bancshares of Florida, Inc., Miami Beach, Florida. e, t, Central First National Bank of Coral Gables, Coral Gables, Florida. None. At any time prior to May 1, 1966, at the annual meeting of shareholders Of such bank, or any adjournments thereof, (1) to amend the Articles of kaeociation.of such bank (a) to permit the board of directors by the vote Of a majority of the full board to add not more than four directors to the board in any one year between annual meetings of stockholders without 4 vote of stockholders, (b) to provide that any nominee to the board of d4ectore (other than one proposed on behalf of the existing bank management) must give prior written notice to the Comptroller of the Currency and 4" to the bank, (c) to provide for the indemnification of damages ePeases incurred by directors, officers and employees of the bank which tillY arise out of their defense of a legal proceeding brought against them Eta a result of their duties with the bank, except where such person has been found liable for negligence or willful misconduct in the performance Of hie duties for the bank, and (d) to change the name of such bank to 411 Gables First National Bank; and (2) to elect directors for the enato 'ng year, and to act thereat upon such matters of a routine nature 383 TARVER -- ATLANTA -2- as are ordinarily acted upon at the annual meetings of such bank, provided that all actions taken with respect to (1) shall be satisfactory to the Comptroller of the Currency. STOP. We have been informally advised that the actions taken with respect to (1)(a), (b), and (c) as submitted by the Applicant are generally in accordance with the Comptroller's rules. (Signed) Merritt Sherman SHERMAN Definition of KECEA: The Board authorizes the issuance of a limited voting permit, under the provisions of section 5144 of the Revised Statutes of the United States, to the holding company affiliate named below after the letter "r, entitling such organization to vote the stock which it owns or controls of the bank(s) named below after the letter "B", subject to the condition(s) stated below after the letter "C". The permit authorized hereunder in limited to the period of time and the purposes stated after the letter "D". Please proceed in accordance with the instructions contained in the Board's letter of March 10, 1947, (S-964).
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