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Minutes for January 29, 1957 To: Members of the Board From: Office of the Secretary Attached is a copy of the minutes of the Board of Governors of the Federal Reserve System on the above date. It is not proposed to include a statement with respect to any of the entries in this set of minutes in the record of policy actions required to be maintained pursuant to section 10 of the Federal Reserve Act. Should you have any question with regard to the minutes, it will be appreciated if you will advise the Secretary's Office. Otherwise, if you were present at the meeting, please initial in column A below to indicate that you approve the minutes. If you were not present, please initial in column B below to indicate that you have seen the minutes. Chin. Martin Gov. Szymczak Gov. Vardaman Gov. Mills Gov. Robertson Gov. Balderston Gov. Shepardson xec13 194 Minutes of actions taken by the Board of Governors of the Federal Reserve System on Tuesday, January 29, 1957. The Board met in the Special Library at 9:30 a.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Martin, Chairman 1/ Szymczak Vardaman Mills Robertson Shepardson Mr. Carpenter, Secretary Mr. Kenyon, Assistant Secretary Mr. Leonard, Director, Division of Bank Operations Mr. Vest, General Counsel Mr. Sloan, Director, Division of Examinations Mr. Hackley, Associate General Counsel Mr. Solomon, Assistant General Counsel Mr. Molony, Special Assistant to the Board Mr. Thompson, Supervisory Review Examiner, Division of Examinations There were presented telegrams proposed to be sent to the follcYwtag Federal Reserve Banks approving the establishment without change (111 the dates indicated of the rates of discount and purchase in their e4leting schedules: Atlanta San Francisco New York Philadelphia Cleveland Richmond Chicago St. Louis Minneapolis Kansas City Dallas Boston January January January January January January January January January January January January 21 and 28 23 24 24 24 24 24 24 24 24 24 28 Approved unanimously. , (4-ew from meeting at point indicated in minutes. 1/29/57 -2There had been circulated to the members of the Board a memo- rial:411m from the Division of Examinations dated January 2, 1957, relating to the application of Walter E. Cosgriff and Associates, Salt Lake City, Ijtall/ for a general voting permit covering stock owned or controlled of the First State BAnk of Salina, Salina, Utah. The Federal Reserve Bank °Is San Francisco had recommended that the application be denied in view °f the unsatisfactory financial condition of the applicant, the general chax'a.cter of its management, and the probable effect of the granting of the equested permit on the affairs of the Salina bank. In its memothe Division of Exsminations referred to the Board's current 1)°11cY of granting determinations pursuant to section 2(c) of the BankAct of 8 4 1933, as amended by section 301 of the Banking Act of 1935, normal matter in all "one-bank" cases except where extraordinary il ' ollmstances were deemed to warrant adverse action. The memorandum Pointed out that Regulation P, Holding Company Affiliates - Voting 1 /111its, contains a provision that the Board will consider a section 301 4ter mina.tion in acting on applications for voting permits. Since the 41P1)14cation of Walter E. Cosgriff and Associates involved a "one-bank" ce.0„ -v, the Division recommended, in the light of the current policy and tile regulatory provision, that a section 301 determination be made. In thi ' connection, the memorandum noted that practically all of Associates' ssete were represented by its investment in its subsidiary bank, that ettch Investment was Associates' only earning asset, and that its printtn.,1 ''"4- activity therefore was related to banking. Since, however, this 196 1/29/57 —3— II a "one-bank" case, group banking was not involved, and Associates " 44 no nonbanking subsidiaries) it was believed that the factors favora section 301 determination outweighed the negative factors. The "ndum further pointed out that the issuance of a section 301 deter4" ion would not lessen the supervisory powers of the System over the 111/41 concerned. As to Associates, the Board would have no supervisory 11°1rer unless the requested voting permit was granted. In a discussion of the matter, Governor Robertson agreed that the recommended procedure would fall within the Board's policy pertainto "one -bank" cases but said that, as he had stated on previous 011°481°113: he disagreed with that policy. In this case) he said, it 's recommended that the requested voting permit be denied, but in grantIre the section 301 determination the Board would be in effect giving --4eral right to Associates to vote its stock of the Salina bank. the m In ' - reumstances, he requested that he be recorded as voting against the re commended section 301 determination. At the conclusion of the discussion, approval was given to a letter to Walter E. Cosgriff and Associates, 200 South Main Street, Salt Lake City, Utah, reading as follows, for transmittal through the Federal Reserve Bank of San Francisco, Governor Robertson voting "no" for the reasons which he had stated: _ This refers to the application of Walter E. Cosgriff and Associates for a permit to vote the stock which it owns 197 1/29/57 -4- of First State Bank of Salina, Utah. This application was enclosed with a letter of August 2, 1956, from Mr. Sturdevant to the Federal Reserve Bank of San Francisco. . The Board understands that Walter E. Cosgriff and Associates holds approximately 93 per cent of the outstanding shares of stock of First State Bank of Salina; that practically all of the assets of Walter E. Cosgriff and Associates are represented by its investment in the stock of that bank; and that Walter E. Cosgriff and Associates does not, directly or indirectly, own or control any stock of, or manage or control, any banking institution other than First State Bank of Salina. In view of these facts, the Board has determined that Walter E. Cosgriff and Associates is not engaged, directly or indirectly, as a business in holding the stock of, or managing or controlling, banks, banking associations, savings tanks, or trust companies within the meaning of the following Provisions of section 2(c) of The Banking Act of 1933: . . . Notwithstanding the foregoing, the term 'holding company affiliate' shall not include (except for the purposes of section 23A of the Federal Reserve Act, as amended) any corporation all of the stock of which is owned by the United States, or any organization which is determined by the Board of Governors of the Federal Reserve System not to be engaged, directly or indirectly, as a business in holding the stock of, or managing or controlling, banks, banking associations, savings banks, or trust companies. Accordingly, Nalter E. Cosgriff and Associates deemed to be a holding company affiliate except for poses of section 23A of the Federal Reserve Act and need a voting permit from the Board of Governors in votC the bank stock which it owns. is not the purdoes not order to „o If, however, the facts should at any time differ from ' 41 se set out above to an extent which would indicate that ;alter E. Cosgriff and Associates might be deemed to be so imIllgaged, this matter should again be submitted to the Board. Board reserves the right to rescind this determination 1Lud make a further determination of this matter at any time un the basis of the then existing facts. 198 1/29/57 -5Consideration then was given to a memorandum from Mr. Leonard dated January 23, 1957, copies of which had been distributed to the Members of the Board, regarding a request from the Federal Reserve 884k of Chicago for approval of the modernization program for its 13resent head office building and the following authorizations: (1) to raze the so-called "taxpayer" building located in the same block 48 the head office building; (2) to call for bids for excavation and the c onstruction of caissons and foundations for the first unit of an a"ion to the head office building, in preparation for steel delivellee in August of this year; and (3) to proceed with detailed plans t°x" new construction, all in accordance with a program approved by the Bank's Board of Directors. The preparation of preliminary plans 1'4:It' development of the property purchased for expansion was authorized bY the Board in June 1956, and the modernization program was a part of the --al head office building project previously presented to the }30 * Mr. Leonard's memorandum recommended that the necessary authorbe given. At the request of the Board, Mr. Leonard commented on the (:)Ilte?,, -14ated program and said that Mr. Persinal Consulting Architect to the Board, had recommended its approval. He also said that in a eoh,_ sation yesterday Mr. Allen, President of the Federal Reserve Bank 01' , 01,44"-eago, told him that the Bank's directors, particularly two members °r the Building Committee fsmiliar with large construction projects, had giveri extensive consideration to the matter. 199 1/29/57 -6During a discussion of the program, Governor Vardaman said that while he had no question about the building plans per se, he ' I l laaed that earlier consideration of the Chicago head office buildProgram was tied ii with consideration of the question of estab14fting additional branches in the Seventh Federal Reserve District. Sillela he continued to feel that additional branches were warranted, he suggested that the matter be taken up again prior to completion f the head office building program. In the present circumstances, he wished to be recorded as not approving the current request for ' ellthorization or any other steps in the head office building program tinless some understanding on the branch question was reached with the Chicago Bank. In view of Governor Vardaman's comments, there was a disellesiorl of the record pertaining to consideration given by the Board to vue branch problem, including the study made by a committee of the 119' consisting of Governors Balderston and Szymczak. The suggestion made that Governor Shepardson discuss the subject with President 41en and, if necessary, with the Chairman of the Reserve Bank. Chairman Martin also suggested that the record relating to 'us consideration of the branch question in the Seventh Federal " re District be brought together for review prior to further disIls ion of the matter by the Board. 200 1/29/57 -7Unanimous agreement having been expressed with these suggestions, approval was given to a telegram to President Allen reading as follows, Governor Vardaman voting "no" for the reasons that he had stated: Board approves over-all program for additions to and modernization of present Bank building as outlined in Harris' letters of January 7, 11, and 16, 1957. Board also authorizes (2) call for bids for unit, (3) preparation for the addition, all by directors. (1) wrecking of the two-story Taxpayer, excavation and foundations for first of detailed plans and specifications in accordance with the program approved Pursuant to the understanding at the meeting on January 23, 1957, there '7e..s further discussion at this time of procedure with respect to the hearing under the Bank Holding Company Act concerning the formation a bank holding company involving The First National City Bank of New City Bank Farmers Trust Company, also of New York City, and County TriAR+ Co mPany of White Plains, New York. The Secretary reported having been advised by Mx.. Wiltse, Vice Pres. ident of the Federal Reserve Bank of New York, that the New York Stet e Senate passed a bill yesterday freezing, with certain exceptions 11°t aPPlicable to this case, the status of bank holding companies in that State until May 1, 1957. Because of other legislative matters the 1311-1 had not yet been taken up by the State Assembly but it was expected that the bill would be passed today and would be signed promptly by the C-°17ernor of New York. In response to a question by Governor Vardaman, Er. Vest said that the Legal Division had no information regarding any intention to test the constitutionality of the bill if it were enacted. He added, 201 1/29/57 -8- however, that during the course of recent hearings on the revision of the Nelr York State banking law, the Chairman of First National City Bank cometted that such a bill might raise constitutional questions. Mr. Vest then reported that the hearing started on schedule last 1111/daY, January 240 with the morning devoted principally to formalities, that a representative of the New York State Superintendent of Banks who vas present asked that the State of New York be admitted as a party to the Pl'"eeding, and that the hearing examiner granted the request over the 4jection of counsel for the applicants. He added that the Board's Coun- d not interpose objection. Governor Mills said that he would like to express objection to the Procedure followed on this point. He recalled that the Bank Holding Corn- 1)11Act vests in the Board the administrative responsibility to pass on r411;ters arising under the Act and, in the case of an application by a hoicit ng company to acquire bank stock, requires the Board to obtain the eire cf the Comptroller of the Currency or the banking authorities of the Ell'r°Priate State, depending on whether a national bank or a State bank is In the case of the current applications, the Board obtained the views of the Comptroller of the Currency and out of courtesy and judg- tlett al80 asked the opinion of the State Superintendent of Banks. been This done, he saw no reason why the State of New York should be dkitted as a party to the proceeding, with authority to cross-examine Vittesses on a basis ranking with the authority of the Board under the 202 1/29/57 -9Chairman Martin inquired what authority the Board had over the hearing examiner in a matter of this kind and Mr. Vest responded that Col-nisei for the Board could appeal the examiner's ruling in any instance /4here it seemed desirable to go to the Board for a decision. In response to a further question by Governor Vardaman on the same point, Mr. Vest Bata that if Counsel for the Board had objected to the admission of the State of New York as a party to the proceeding and the objection had been overruled by the hearing examiner, it would have been possible, 84th°11gh very unusupl, for the Board's Counsel to appeal the matter to the Board without waiting until the end of the hearing. Mr. O'Connell added to Mr. Vest's comment by saying that the BOA'KA t position was intermediate between the hearing examiner and the °Iirts. In any case where the hearing examiner made a ruling, the next stel)vould be to appeal to the Board and then there might follow an 41313eal to the courts by the parties adversely affected. Mr. Vest said that the Legal Division had envisaged the possi13ilitY that some competing banking institution or the Attorney General t the United States might ask to be admitted as a party to the proee (-14 -41g. Neither of those developments had occurred as yet, although Couta tY Trust Company was admitted separately as a party because it was orie Of the institutions directly involved. Mr. Vest went on to say tha 'le understood the Attorney General had written a letter to First kt^ `14a1 City Bank posing a number of questions calculated to bring %It If hether the proposed transactions would be in violation of the 21)3 1/29/57 -10- antitrust law. This letter was not of record in the case at this time ana he did not know whether any steps would be taken in that direction. Returning to developments at the hearing, Mr. Vest said that ThilreclaY afternoon a pre-hearing conference was held with the hearing examiner and the respective counsel present, at which time details and arraagements pertinent to the conduct of the hearing were discussed. The 'witnesses were now ready to appear at the scheduled times tomorrow, 7114"daY, and Friday, Counsel for the Board and the applicants were reaaY to proceed, and the New York State Superintendent of Banks presuluablY also was ready. It was the feeling of the Legal Division, he se ' id) that if the New York State freeze legislation was enacted, it °tad effectively bar until its expiration date the acquisitions pro15°Bed- bY the applications under the Bank Holding Company Act, but this 0 I)1131-e4 was open to some question because there might be doubt whether a State statute could affect a question involving national banks. On thi8 11°/int, he said, the Legal Division agreed with the statement made bYthe American Bankers Association at the hearings on the Bank Holding 00htm.,-.eq'ulY Act to the general effect that a State could apply a restriction 04 a corporation organized or doing business in the State even though the er feet might be to bar an acquisition of stock in a national bank. Re th °ught that that would be the view of the courts, although there r4ight b e some question. Mr. Vest also pointed out that the Bank Holding C°111Pa4v A 4 —cL, specifically provides that nothing therein shall be deemed to everit a State from passing any legislation that it would otherwise 4a.lre a right to pass. 204. 1/29/57 Mr. Vest then suggested alternative procedures which the Board Inight wish to consider as follows: (1) let the hearing proceed without in any way recognizing the State freeze legislation; (2) let the hearing proceed, but with a statement or perhaps a general understanding that the Board would not make any decision in the matter until after ctriaPPropriate time, say May 1, 1957; or (3) postpone the hearing until MaY 1 or until such earlier time as the New York State Legislature might enact permanent legislation in this field. If consideration was to be given to a postponement, he felt that it would be desirable to get in t°1161 with counsel for all parties to the case and report their views t0 the Board before any final action to postpone was taken. °la to He vent say that postponement could be effected by a motion in open hear- t g but that he would not suggest such a procedure. With further reference to the point of procedure raised by GovMills, Mr. O'Connell replied to a question from Chairman Martin bY sayi --ng that Counsel for the Board had not approved the admission t Nev. York State as a party to the proceeding. Rather, the Board's Courlpel offered no objection to the motion made by the representative t the New York State Banking Department. That left the Board's Counsel 14. 9P- status of neutrality and the ruling of the hearing examiner was then Illade '0 -) which counsel for the applicants entered a reservation to take e)ceePtion at a later time. Chairman Martin stated that it seemed to him the Board's Counsel cl°ne about all that he could do under the circumstances unless it 205 1/29/57 -12- /las desired that the Board be available for consultation on every 4tail. In further comments, he expressed doubt whether it would be feasible and appropriate for the Board to follow such a course 14 view of its total area of responsibilities, including its responaibilities for the formulation of monetary and credit policy. Mr. Vest recalled that in the earlier stages of discussion bY the Board concerning the First National City Bank matter, there Ilas outlined to the Board the role which it was contemplated that the Board's Counsel would take in connection with the hearing. This Illeauded a statement that Counsel for the Board would take a neutral 44Q1 Objective position, and endeavor to see that all proper evidence 14''a8 adduced and obtained for the record. He thought it was under- stil that the Board's Counsel would make a statement of that kind at the b eglnning of the hearing, and such a statement therefore was made. Governor Robertson commented that if he had been in the trial exan iner s position, he would not have been inclined to grant the Petit, to admit New York State as a party. However, before the toJ4,, 'a attempted to intervene in any way, either through its Counsel by 16s own action, he felt it should be clear that someone's rights -en prejudiced. In this particular case, the rights of the applieatits had not been prejudiced because the only purpose of the hearing ' 4) Provide a record on which the Board would act. The admission or Ile_ York State as a party would give the right to have counsel crossXezni Ile witnesses, but he asked whether the Board could complain on that 1/29/57 -13- score because the record would now be more complete. In all the circum- stances, he felt that Counsel for the Board acted properly and in accordance with previous discussions of the Board which indicated that its C°Unsel should take an impartial and objective position. He agreed in 1311incip1e with Chairman Martin that the Board should not get into procedural aspects in any hearing of this kind and he did not think the kilninistrative Procedure Act contemplated an agency putting itself in such a position. Governor Vardaman said he agreed with the statements of Chairman Martin - and Governor Robertson regarding detailed supervision. he However, "J-ved at a different conclusion about the admission of New York Stat, slnee he did not think that the failure to object to the petition l'estated in maintaining a neutral position. Governor Szymczak expressed views along the lines of those stated tYChai --Man Martin. While he considered it unfortunate that the State Ne._ w York had been admitted as a party, he felt at the same time that the '°nduct of Counsel for the Board was appropriate. Mr. O'Connell confirmed that the record did not reflect in any lia•Y that there was prior discussion by the Board or its staff regarding the 1)(Isition. of New York State at the hearing. He went on to say that event that other parties should try to intervene in the same 414441er as New York State, any such motions could be handled on a case"se basis in the light of the law and the facts involved. As to tr _lay() k r, State, he said, it had been assumed that if a motion to be e41141-tt A e- as a party was made, the applicants would object and state 207 1/29/57 the reasons, which would give the examiner information on which to base his determination. If the Board's Counsel also had objected, this might have been inconsistent with the position that the Board /7ar1ted in the record as much relevant information as could be made available in order to reach its decision. That was the general l'atioaale that led the Board's Counsel to interpose no objection. Governor Mills inquired whether a distinction should not be niade between the right to testify and right to cross-examine, stating that the New York State authorities previously had been invited to te8t1-2Y but that in his opinion the admitting of the State as a party ° the proceeding was quite a different thing. After agreeing that there was a distinction, Mr. O'Connell that personally he felt it would be somewhat difficult, if it came to a 1 _ argument, to keep the State of New York out of the proceeding . lnee in his opinion the State might be able to prove that it had a5 adverse interest in the matter to substantiate a claim 4, th '" it should be a party at interest. In other words, if the matter 444 -0 court he felt that the court might well uphold the contention °lithe State that it was a party at interest. The discussion then reverted to the question of going forward with t he hearing or postponing it and, at the request of the Chairman, If est set forth arguments on both sides of the question. On the sicie (32 continuing with the hearing he said that (1) the applicants 4- 1/29/57 -15- hadmade application and it might be said that they were entitled to reasonably prompt disposition of the matter, and (2) the hearing had started, the interested parties were ready to proceed, and the taking Of testimony apparently would be concluded by early next week. On the Other side of the question he said that there were (1) legal consider. Etti°4s and (2) considerations having to do with public relations and the Public policy of the State of New York. From the legal standpoint, if the Board went through with the hearing and granted the applications, the proposed transactions apparently could not take place legally as 1°111g as the current freeze legislation was in effect. From the stand. Pt:I/lit of public policy and public relations, the question was whether the Board wished to be in a position of continuing with the hearing 14 the light of the policy declared by the State of New York through its legislation. This question was emphasized because the Board is l'ecillired to take into consideration whether the formation of a holding 4141:Ps-IV would be consistent with public policy and the preservation t competition in the field of banking. That would appear to mean hst the Board must take into account the public policy of the State. Governor Shepardson inquired what could be said for going forWith the hearing if the New York freeze legislation was signed, ,Lv Vest responded that from the legal standpoint there was techno reason why the Board could not go ahead and approve or disapprove the applications. If it approved them, the applicants 1)1'eslarnably would go ahead and form the holding company, and presumably r 209 1/29/57 -16- at that point the State of New York would institute legal proceedings to enjoin. them from going ahead. Therefore, it would be possible for the Board by that means to avoid the legal question altogether and let it be decided between the applicants and the State of New York. Mr. Vest went on to say that in his opinion the Board would not be in a 8°11nd legal position if it regarded the New York State legislation as 11°t being effective, although there might be an area of doubt on that 113int. In a discussion of procedure on the basis of the considerations tlelltioned by Mr. Vest, Governor Vardaman stated that he thought any Stat e law enacted as of a future date would be ex post facto as far as the hearing was concerned. hear,- He saw nothing to prevent completing the with the understanding that before a final decision was made the B°ard could take into account State legislation and State policy. Chairman Martin then suggested that the question appeared to --Lye a matter of judgment whether to proceed with the hearing in the, 'ace of the legislative developments in New York State. He thought that Governor Vardaman's point was a reasonable one frcm a legal stand1)°14t ' Oa the other hand there would be a practical question whether the oard would have to start the hearing over again following the N'iration date of the State legislation so as to take into account ‘41 .t h -ad happened in the intervening period. In response to questions, Mr. Vest confirmed that, if the hear4. " - 1. were resumed after May 1, 1957, the Board could send the matter 210 -17- 1/29/57 baekto the hearing officer for further evidence before making any He then enumerated the procedures that would have to be deeision• gone through after the taking of testimony had been completed and Dclated out that these steps would take a considerable amount of It was possible, he said, that a party to the proceeding tinie- taight request an opportunity to present oral argument before the Board.. Governor Mills inquired whether it was not explicit in the sta:twte that the Board was the administrative agency designated by the n a L'10 gress to make decisions on applications under the 'Bank Holding corn ParlY Act and also whether it was not explicit in the law that the toarA could not approve expansion of a holding company outside of the Qt,ate of residence in the absence of specific language in the statut es of the State to which the holding company proposed to exHe said that the legislative history of the Bank Holding Com- 1144Y Act disclosed a strong effort to have the Congress pass legislett° a that would prohibit crossing State lines and also expansion ' 4111 the State. The Congress did not include provisions prohibiting State expansion but did say that as one of the elements in dectain g on an application, the Board should look sympathetically and l'e4sonAl on any position taken by a State in its legislation. This Vow', "leave for final court determination a situation where there was 4 lack tho Of conclusiveness. Mr. Vest said he agreed with this statement generally, alit should be kept in mind that one section of the Act indicates 1/29/57 -18- that the Act is not intended to prevent a State from passing any legislation which it would otherwise would have a right to pass. Therefore) he felt that if a State passed legislation, otherwise valid, to prohibit h°1ding companies, any action of the Board would be ineffective. While there might be a difference of opinion whether a State statute was e04st itutional or unconstitutional, he felt that aside from such question the Board's action would be ineffective if the transaction in questl°11 was prohibited by State legislation. Questions then were raised from the standpoint of public relati°'" and Mr. Molony indicated what problems were likely to arise from alter native actions by the Board under varying circumstances. Chairman Martin stated that he had to leave the meeting at this tune because of an outside appointment, that he had no strong feeling he the hearing should be continued or postponed, but that on bal411ce he felt it would be better to let the hearing go forward. He cornetea that _ all of the interested parties were ready and that it seemed lewhat late for the Board to act unless it was going to postpone the lieri4g. for a stated period of time. While he recognized that a good e4Se e°1,11d be made on the other side) it was his general feeling that '41en 4 Matter till'°11gh of this kind is started the best course is to pursue it to the end. Gove nor Vardaman then moved that the hearing proceed as scheduled IllAt no vote was taken on the motion at this time and Chairman Martin 14ithclre f w rom the meeting. 1129/57 -19The discussion continued with a statement by Governor Robertson 11114hich he said that any decision the Board made would have to assume "actment of the State freeze legislation. In these circumstances, he felt that the Board's Counsel should be instructed to ask for a recess r the hearing until the expiration date of such legislation, or until the Courts had ruled that the legislation was either valid or invalid. 11: was his view that to proceed with the hearing meant engaging in a activity designed only to make a record that could not stand 14 the light of the State policy embodied in legislative action. 1110 Inter- parties would be required to come to Washington and testify regardthe applications on the basis of existing law which might very well be affected by the State legislation. In passing the contemplated leg- lon, he said, the Legislature was trying to give itself time to l'°113111a-to rules regarding the situation in the State of New York, and 1)1'esuillablY legislation for that purpose would be adopted prior to the sXPiration date of the freeze statute. 84' that Governor Robertson went on to whatever decision the Board made on the applications at this tune 78..s apt to be wrong because of the likelihood of permanent State --Lon mapping out the areas within which holding companies could In such circumstances, he could not vote to require interested Deople to go to the expense and inconvenience of testifying in order to Dre ' e a record in connection with what might be a futile activity. He th -°11ght that the Board would be subject to criticism and that its N.at. 1°11ship5 with the State of New York might be injured if it appeared ttIct the Board was in some way flouting the State legislation relating 21:3 1/29/57 to -20- holding companies. He would, therefore, authorize Counsel for the ` ) 1 arli to make a motion to recess the hearing, but if the examiner were to overrule that motion he would let the examiner's decision stand and 11041d let the courts, if they wished, change the decision. Governor Vardaman stated that if he felt as Governor Robertson dId, be would move that the Board order the hearing recessed and not leave the matter to the hearing examiner. However, the State of New York-- and First National City. Bank were both parties to the proceeding e felt that the Board should not preempt the authority of the hear4 officer by a Board order at this stage. Therefore, he would 131'efer to proceed with the hearing, with the understanding that if the State or the applicants should petition for a recess, the Board /r°11.1d let the hearing officer make a decision. While he felt that the lloard should of course hear any appeal which was submitted, he would make sure that the hearing examiner had had the question before Following a restatement by Governor Szymczak of the alternatives Irailable to the Board, Governor Vardaman renewed his motion that the .418 proceed as scheiuled. This motion was approved, Governors Szymczak, Vardaman, and Mills voting "aye" and Governors Robertson and Shepardson voting "no", with the understanding that Chairman Martin's vote in favor of the motion also would be recorded. 214 - 1/29/57 Mr. Vest then inquired what Counsel for the Board should do in the event a motion was made by any other party at the hearing to adjourn Postpone the hearing, assuming that the New York State Legislature had passed the proposed freeze legislation at such time. Following a discussion of this point, it was understood that if such a motion should be made by a party to the proceeding, Counsel for the Board would listen to any reasons that were stated for and against the motion and would then ask for a recess of the hearing until the next day in order that he might consult with the Board. The meeting then adjourned. Secretary's Notes: Pursuant to recommendations contained in memoranda from appropriate individuals concerned, Governor Shepardson approved on behalf of the Board on January 24, 1957, adjustments in the basic annual salaries of the following individuals in the amounts indicated, effective January 27, 1957: Nalqi nd Title Division Basic annual salary From To Office of the Secretary 14' Elizabeth Jones, 2 11Pervisor„ Minutes Unit 1/ 5)335 4; 5,510 6,390 5,980 5,980 11,180 6,605 6,115 6,115 11,395 Research and Statistics t I\rlci C. Crockett, Economist 6-1 en R. ' Dyer, Librarian 4e2 „ J. Swindler, Economist ''.,1111 --"e•Y Wood, Economist -e hanged from Senior Index Clerk. 215 1/29/57 increases -22effective January 27 1957 (Continued) name and Title Division Basic annusl salary From To Administrative Services ' 41 1 J. Steger, SteamfitterOperating Engineer *4,560 414,695 $6,115 .(:)'6, 250 Office of the Controller oh /Cakalec, Accountant On the same day Governor Shepardson noted on behalf of the Board the statement contained in a memorandum dated January 22, 1957, from Mr. Bethea„ Director, Division of Administrative Services, that the application of Bruce M. Unger, Sergeant, Guard Force, in that Division, for retirement under the Retirement System of the Federal Reserve Banks was being processed by the Retirement System and that it was expected, therefore, that Mr. Unger's employment with the Board would terminate as of the close of business January 31, 1957. Also on the same day, Governor Shepardson approved on behalf of the Board the following letter to Mr. Wiltse, Vice President, Federal Reserve Bank of New York: In accordance ter of January 18, /3f Alfred E. Hamel +nit of New York. '41e appointment is 1 with the request contained in your let1957, the Board approves the appointment as an examiner for the Federal Reserve Please advise as to the date upon which made effective. 216 1/29/57 -23On January 25, 19571 Governor Shepardson approved on behalf of the Board the following items relating to the Board's staff: Memorandum dated January 22, 1957, from Mr. Carpenter, Secretary the Board, recommending that Irene D. Lewis be transferred from the t:Bition of Minutes Clerk to the position of Clerk in the Office of the er!retary, with an increase in basic annual salary from $3,600 to $3,755, iective January 27) 1957. Of si Memorandum dated January 25, 1957, from Mr. Sloan, Director, otD0,2n of Examinations, recommending that the resignation of John F. 'ela, Assistant Federal Reserve Examiner in that Division, be acpced effective January 281 1957. On January 281 1957, Governor Shepardson approved on behalf of the Board the recommendation contained in a memorandum dated January 23, 1957, from Mr. Bethea, Director, Division of Administrative Services, that the resignation of John H. Battle, Laborer in that Division, be accepted effective February 15, 1957. Advice having been received, pursuant to the action taken by the Board on January 10, 1957, that Mr. Leonard K. Firestone, President, Firestone Tire & Rubber Company of California, Los Angeles, California, and Mr. Edward W. Carter,. President, Broadway-Hale Stores, Inc., Los Angeles, California, both would accept appointment, if tendered, to the Board of Directors of the Los Angeles Branch, Federal Reserve Bank of San Francisco, the following telegram was sent to Mr. Firestone on January 28, 19571 along with a similar telegram to Mr. Carter, whose term would expire December 31, 1957: 14'ex1ch 03 Qtrd of Governors has appointed you director of Los Angeles ; xederal Reserve Bank of San Francisco for remainder of term _ 21' 1/29/57 expiring December 31, 1958. Your acceptance by collect telegram would be appreciated. not holdIt is understood that you are not director of any bank and do res public or political office. Should situation change in these Pects during your tenure please inform Chairman San Francisco Bank. bus We should like to know how you wish your name and principal ine "affiliation to be shown in Board's announcement and publications. Pursuant to the authority given by the Board on February 20, 1956, and the recommendation contained in a memorandum dated January 25, 1957, from Mr. Noyes, Adviser, Division of Research and Statistics, Governors Robertson and Shepardson approved on behalf of the Board the appointment of Raymond Goldsmith as Consultant until December 31, 1957, for purposes of the commercial bank preparedness Program, on a temporary contractual basis, with compensation at the rate of $50 per day for each day worked for the Board. The memorandum stated that it was not expected that any travel would be involved and that Mr. Goldsmith probably would not be engaged for more than five consultant days in connection with this assignment.
@FedFRASER