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Minutes for
To:
Members of the Board
From:
Office of the Secretary
January
8, 1964
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.
Chm. Martin
Gov. Mills
Gov. Robertson
Gov. Balderston
C-ov. Shepardson
Gov. Mitchell
Gov. Daane
30
Minutes of the Board of Governors of the Federal Reserve
System on Wednesday, January
8, 1964. The Board met in the Board
Room at 10:00 a.m.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Martin, Chairman 1/
Balderston, Vice Chairman
Mills
Robertson
Shepardson
Mitchell
Daane
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Sherman, Secretary
Kenyon, Assistant Secretary
Noyes, Adviser to the Board
Molony, Assistant to the Board
Fauver, Assistant to the Board
Hackley, General Counsel
Solomon, Director, Division of
Examinations
Hexter, Assistant General Counsel
Hooff, Assistant General Counsel
Conkling, Assistant Director,
Division of Bank Operations
Kiley, Assistant Director, Division
of Bank Operations
Goodman, Assistant Director, Division
of Examinations
Smith, Assistant Director, Division of
Examinations
Leavitt, Assistant Director, Division
of Examinations
Thompson, Assistant Director, Division
of Examinations
Spencer, General Assistant, Office of
the Secretary
Bakke, Senior Attorney, Legal Division
Young, Senior Attorney, Legal Division
Eckert, Chief, Banking Section, Division
of Research and Statistics
Lyon, Review Examiner, Division of
Examinations
17 Withdrew from meeting and re-entered as indicated in minutes.
31
1/8/64
-2Discount rates.
The establishment without change by the
Federal Reserve Bank of Boston on January
6, 1964,
of the rates on
discounts and advances in its existing schedule was approved unanimously, with the understanding that appropriate advice would be sent
to that Bank.
Distributed items.
The following items, copies of which are
attached to these minutes under the respective item numbers indicated,
were approved unanimously:
Item No.
Letter to Bank of America National Trust
and Savings Association, San Francisco,
California, granting permission to establish
a branch in Managua, Nicaragua.
1
Telegram to the Federal Reserve Agent at
Richmond authorizing the issuance of a
general voting permit to United Virginia
Bankshares Incorporated, Richmond,
Virginia, covering its stock in First and
Citizens National Bank of Alexandria,
Alexandria, Virginia; First National
Trust and Savings Bank of Lynchburg,
Lynchburg, Virginia; State-Planters Bank
of Commerce and Trusts, Richmond, Virginia;
and The Vienna Trust Company, Vienna,
Virginia.
2
American Financial Corporation (Item No. 3).
of the Board on January
6,
At the meeting
1964, there was preliminary discussion of a
request by American Financial Corporation, Cincinnati, Ohio, for a
determination exempting it from all holding company affiliate requirements except those contained in section 23A of the Federal Reserve Act,
and the matter was held over for further consideration.
1/8/64
-3In a distributed memorandum from the Division of Examinations
dated December 31, 1963, it had been suggested that approval of the
request would appear to be in accord with the Board's policy of making
a favorable determination as a normal matter in all so-called one-bank
cases except in extraordinary circumstances.
In this case, it was felt
that ownership and control of certain savings and loan associations and
Other non-banking subsidiaries did not constitute extraordinary circumstances such as to warrant denial of the request.
Attached to the memorandum was a draft of letter stating that
the Board understood that American Financial Corporation was engaged
In the business of holding all the permanent stock of two, and all of
the withdrawable shares of one, building and loan associations; all
of the outstanding stock of a general insurance agency; and substantially all of the capital stock of a life, health, and accident insurance company.
In addition, the corporation engaged in various other
activities including the leasing of machinery and plant equipment, store
and office furniture; it awned and managed a medium-sized shopping
center, and was developing a large shopping center.
American Financial
Corporation was a holding company affiliate by the reason of the fact
that it owned 2,450 of the 2,500 outstanding shares of stock of The
Athens National Dank, Athens, Ohio, and the corporation did not directly
or indirectly awn or control any stock of or manage or control any
Other banking institution.
The draft letter would state further that
Q
_l_
1/8/64
In view of these facts the Board had determined that American Financial
Corporation was not engaged directly or indirectly as a business in
holding the stock of or managing or controlling banks, banking associations, savings banks, or trust companies within the meaning of section
2(c) of the Banking Act of
1933; accordingly, the corporation was not
deemed to be a holding company affiliate except for the purposes of
section 23A of the Federal Reserve Act, and it did not need a voting
Permit from the Board of Governors in order to vote the bank stock
that it owned.
At the request of the Board Mr. Bakke commented on the request,
With emphasis on distinctions that could be drawn between commercial
banks and savings and loan associations.
Following Mr. Bakke's comments, there was a lengthy discussion
that included a review of the general position that the Board had
adopted of granting favorable determinations, except in extraordinary
circumstances, when the applicant holding company affiliate owned or
controlled the stock of only one bank.
It was generally agreed that
the facts in this case suggested once again the desirability of a change
in the Bank Holding Company Act in order to include one-bank situations
Within the holding company definition.
Governor Robertson observed that Board policy in so-called
one-bank cases provided for exceptions in cases where there were extraordinary circumstances.
In this case the circumstances warranted making
341_
1/8/64
-5-
an exception, in his opinion, because several financial institutions
of a bank-like character were tied together in the holding company
These subsidiaries were all engaged in the business of
set-up.
getting money from the public and lending it out.
Therefore, he would
oppose approving this request.
After further discussion, however, it was the majority view
that the facts in the instant case were not such as to warrant deviating
from the one-bank policy.
Accordingly, the letter to American Financial
Corporation granting the requested determination was approved, Governor
Robertson dissenting.
A copy of the letter is attached as Item No.
3.
Messrs. Goodman, Thompson, and Lyon then withdrew from the
meeting.
Fees for special counsel at Boston (Item No.
Of the Board on January
6, 1964,
4).
At the meeting
there was preliminary discussion of
the proposed employment by the Federal Reserve Bank of Boston of special
counsel in connection with certain administrative and legal proceedings
relating to an application by that Bank for abatement of the real
estate taxes assessed by the City of Boston for the calendar year 1963.
The Reserve Bank requested Board authorization for an expenditure not
to exceed the sum of $15,000 for legal fees and proposed that this sum
be regarded as a limitation beyond which payment would not be made to
Special counsel without further approval of the Board of Governors.
During the discussion on January
6,
certain questions were
raised with respect to the proposed retention of special counsel,
1/8/64
-6-
wherefore it was decided to discuss aspects of the matter with President
Ellis of the Boston Reserve Bank.
Subsequently, on January 71 the Board
discussed this subject with President Ellis.
Members of the Board now indicated that their questions on the
Bank's request had been resolved satisfactorily.
Accordingly, a letter
to the Boston Reserve Bank authorizing it to pay fees to special counsel
was approved unanimously in the form attached as Item No.
4.
Mr. Bakke then withdrew from the meeting.
Loans to executive officers (Item No. 5).
There had been
distributed a memorandum from the Legal Division dated January
6, 1964,
with regard to a question concerning Regulation 01 Loans to Executive
Officers of Member Banks, and section 22(g) of the Federal Reserve Act.
The memorandum stated that a letter from the Detroit Branch
Of the Federal Reserve Bank of Chicago, enclosing a letter from counsel
for the National Bank of Detroit, raised a question whether the indebtedness to the National Bank of Detroit of executive officers
resulting from that bank's purchase of a department store's retail
customer accounts must be approved by the directors of the bank in order
to fall within the exception to the prohibition contained in section 22(g)
of the Federal Reserve Act against loans to executive officers.
The
exception permits an executive officer to become indebted to his bank
if the amount does not exceed $2,500 and if the transaction has received
the prior approval of a majority of the bank's board of directors.
The
1/8/64
_7_
letter of December 23, 1963, from counsel for the National Bank of
Detroit stated that the bank proposed to purchase from a Detroit department store all of its outstanding customers' ordinary monthly
charge accounts as of the end of the current fiscal year.
Among the
accounts that were being purchased were those of certain officers of
the bank.
It was recommended in the memorandum that the Board take the
Position that compliance with the law would be achieved by the adoption
by the directors of the member bank of a blanket resolution approving
extensions of credit and indebtedness up to $2,500, that resulted from
the purchase of department store accounts which included accounts of
its executive officers.
A draft of letter to the Detroit Branch of
the Federal Reserve Bank of Chicago reflecting this position was attached
to the memorandum.
Since such bank-department store arrangements might be widespread, the memorandum suggested that the proposed letter, if approved
by the Board, be sent to all Federal Reserve Banks for guidance.
However,
it was believed that it need not be published in the Federal Register
and the Federal Reserve Bulletin.
The Board, it was suggested, might
wish to consider a possible amendment to Regulation 0 that would expressly exclude from the definitions of "extension of credit" and
"Indebtedness" the acquisition by a member bank in good faith of charge
or time credit accounts opened by any of its executive officers with
any store or merchant up to some specified amount, such as $500.
4
1/8/64
-8At the request of the Board, Mr. Hackley commented on the recommen-
dations made by the Legal Division, basing his remarks upon the information
presented in the memorandum of January
6. He stated that if Regulation 0
should be amended as suggested in the memorandum, he would now recommend,
upon further thought, that the limitation of $500 be removed.
The ensuing discussion centered around the question of how
this matter might be most appropriately handled, especially in the light
Of the recent interpretation issued by the Comptroller of the Currency
with respect to loans to executive officers of national banks.
Mr. Hackley
suggested that if the Board was disposed to consider amending Regulation 0,
the proposed letter to the Detroit Branch include a paragraph indicating
that in the light of its statutory authority to define the term "indebtedness" for the purposes of section 22(g), the Board was considering an
amendment to Regulation 0 that would expressly exclude from the meaning
Of that term the indebtedness of any executive officer arising from a
transaction such as described by the National Bank of Detroit.
It was generally agreed in discussion that there was a need,
in present circumstances, for over-all review of Regulation 0 before
going ahead with a particular amendment.
The sending of the proposed
letter to the Detroit Branch was then approved unanimously, with the
understanding,
however, that the letter would include an additional
Paragraph such as that suggested during the discussion.
Of the letter, as sent, is attached as Item No.
A copy
5. It was also
1/8/64
-9-
understood that the Legal Division would undertake a general review
of Regulation 0 along the lines suggested at this meeting.
Chairman Martin, who had withdrawn from the meeting during
discussion of the foregoing matter, re-entered at this point.
Capital notes and debentures.
There had been distributed a
memorandum from Mr. Hackley dated January
3, 1964,
discussing the
question whether capital notes or debentures issued by banks, that are
subordinated to deposit liabilities, may be considered as part of a
bank's capital stock, capital, or surplus, for the purpose of various
provisions of the Federal Reserve Act that impose requirements or
limitations upon member banks.
The memorandum pointed out that in an interpretation dated
December 17, 1963, the Comptroller of the Currency ruled that capital
notes or debentures issued by a national bank, which are expressly
subordinated to the prior payment in full of all deposit liabilities,
may be included as part of the bank's capital stock and surplus in
computing the limit on loans to individual borrowers prescribed by
section 5200 of the Revised Statutes.
That section provides, with
certain exceptions, that loans by a national bank to any one borrower
may not exceed 10 per cent of such bank's capital stock actually paid
in and unimpaired, and 10 per cent of its unimpaired "surplus fund."
The memorandum went on to point out that the Comptroller of
the Currency's ruling did not say explicitly whether capital notes and
debentures were regarded as capital stock or as surplus funds within
1/8/64
-10-
the meaning of section 5200; it said only that they might be included
as part of the aggregate amount of "unimpaired capital stock and unimpaired surplus funds."
Except for a limitation on loans secured by
stock or bond collateral, the Federal Reserve Act contained no limitations on loans by State member banks to a single borrower like those
applicable to national banks under section 5200 of the Revised Statutes.
Limitations of that kind were imposed on State banks by the laws of
most States and any competitive advantages that national banks might
enjoy as a result of the Comptroller's ruling would depend upon State
statutes and interpretations of such statutes by the State authorities.
The Comptroller's ruling raised certain questions as to the
interpretation of a number of provisions of the Federal Reserve Act
that impose limitations on State member banks--and in certain instances
cn all member banks--that are related to the "capital stock" or "capital"
of such banks.
The Legal Division's memorandum set forth the relevant
Provisions of the Federal Reserve Act and also discussed certain
historical background relating to the use of capital notes or debentures
by banks.
In conclusion, the memorandum stated that it was believed
that there was no alternative, as a legal matter, to the conclusion
that capital notes and debentures may not be regarded as a part of
capital or capital stock for purposes of any provisions or limitations
in the Federal Reserve Act that use those terms.
If the inclusion of
notes and debentures as part of capital was considered to be desirable
40
1/8/64
-11-
as a matter of policy, that objective should be accomplished by explicit amendment to the law rather than by interpretation.
The memorandum noted that in view of the Comptroller's recent
interpretation with regard to the use of capital notes and debentures,
the Board would probably receive inquiries regarding the Board's position.
Accordingly, it was recommended that the Board issue a statement to
the effect that the proceeds of notes and debentures could not legally
be included in capital, capital stock, or surplus for the purposes of
certain provisions of the Federal Reserve Act.
It was also recommended
that, if such a statement was approved by the Board, it be issued not
only as a press release but also as a formal interpretation that would
be published in the Federal Register and the Federal Reserve Bulletin.
A suggested draft of such a statement was attached to the memorandum of
January
3; a revised draft had been distributed under date of January 8,
1964.
At the Board's invitation, Mr. Hackley commented in supplementation of the information presented in the memorandum of January
3.
In discussion, Governor Mitchell suggested that the proposed
statement include two sections:
first, an interpretation of the law
and then some indication of the policy views of the Board with respect
to the use of capital notes and debentures by banks.
certain editorial changes in the draft statement.
He also proposed
41
1/8/64
-12There ensued a lengthy discussion that focused primarily on
the question whether any statement that might be issued should express,
as Governor Mitchell had suggested, policy views on the use of capital
notes and debentures as well as legal considerations involved.
At the
conclusion of the discussion, it was understood that the staff would
Prepare for consideration a revised draft of statement dealing with
both aspects.
Messrs. Noyes, Molony, Hexter, Hooff, Conkling, Kiley, Leavitt,
Young) and Eckert then withdrew from the meeting.
Examination of Minneapolis Reserve Bank.
There had been
circulated to the Board the report and the usual related papers with
respect to the examination of the Federal Reserve Bank of Minneapolis
by the Board's
examining staff as of September
3,
1963.
In addition,
a summary memorandum prepared by the Division of Examinations under
date of December 11, 1963, had been distributed.
At the request of the Board, Mr. Smith commented on information
disclosed by the examination, and it was agreed that there were no
matters appearing to warrant action on the part of the Board.
In relation to the examination of the Minneapolis Reserve Bank,
there had also been distributed a memorandum dated December 18, 1963,
illustrating the
types of matters typically reviewed by the Board's
examiners with the management of a Reserve Bank but not considered of
such importance as to warrant inclusion in a report of examination.
42
1/8/64
-13-
Mr. Smith commented on the matters discussed in the memorandum, including their disposition.
All members of the staff except Messrs. Sherman, Kenyon, and
Fauver then withdrew from the meeting.
Director appointment.
It was noted that it had not yet been
ascertained whether Dr. John A. Hunter, President of Louisiana State
University, Baton Rouge, Louisiana, would accept appointment, if tendered,
as Class C director of the Federal Reserve Bank of Atlanta for the
unexpired portion of the three-year term ending December 31, 1966.
It
lqas understood that if it should be ascertained that Dr. Hunter could
not accept, inquiry would be made as to the availability of Dr. Andrew D.
Holt, President of the University of Tennessee, Knoxville, Tennessee,
currently serving as a Board-appointed director of the Nashville Branch.
Secretary's Note: It was subsequently
ascertained that Dr. Hunter would accept
the appointment if tendered, and the
appointment was made.
The meeting then adjourned.
Secretary's Note: Pursuant to the recommendation contained in a memorandum from the Division
of International Finance, Governor Shepardson
approved on behalf of the Board on January 7,
1964, acceptance of the resignation of Richard H.
Kaufman, Economist in that Division, effective
January 31, 1964.
Secretary%
/'
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.• c,of Gov_ •.
4•
•'‘..
...
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.
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Item No. 1
BOARD OF GOVERNORS
1/8/64
..
...
..
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
January 8, 1964,
Bank of America National Trust
and Savings Association,
300 Montgomery Street,
San Francisco, Califo
rnia.
Gentlemen:
The Board of Governors of the Federal Reserve System grants
its permission to Bank of America National Trust and
Savings Association, San Francisco, California, pursuant to the provis
ions of Section
25 of the Federa
l Reserve Act, to establish a branch in the City of
Managua, Nicaragua, and to operate and maintain such branch
subject to
the provisions of such
Section and of Regulation M.
Unless the branch is actually established and opened for
business on or before January 1, 1965, all rights grante
d hereby shall
be deemed to
have been abandoned and the authority hereby granted will
automatically terminate on that date.
Please inform the Board of Governors, through the Federal
Reserve Bank of San Francisco, when the branch
is opened for business,
furnishing information as to the exact location of the branch
. The
Board should also be prompt
ly informed of any future change in location
of the branch within
the City of Managua.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
(The letter to the Reserv Bpnk stated that the
e
Board also had approved a six-month extension
Of the period
allowed to establish the branch;
and that if an extens
ion should be requested,
the procedure
prescribed in the Board's letter
of November 9, 1962 (S-1846), should be followed.)
41
Item No. 2
1/8/64
TELEGRAM
LEASED WIRE SERVICE
RESERVE SYSTEM
BOARD OF GOVERNORS OF THE FEDERAL
WASHINGTON
January 8, 1964
HYDE 0-- RICHMOND
KEBJE
A. United Virginia Bankshares Incorporated, Richmond, Virginia.
B.
First and Citizens National Bank of Alexandria,
Alexandria, Virginia;
,
First National Trust and Savings Bank of Lynchburg
Lynchburg, Virginia;
State-Planters Bank of Commerce and Trusts,
Richmond, Virginia; and
The Vienna Trust Company, Vienna, Virginia.
C. Prior to issuance of permit authorized herein, Applicant shall
form
execute and deliver to you, in duplicate, an agreement in
accompanying Board's letter S-964 (F.R.L.S. #7190).
(Signed) Elizabeth L. Carmichael
CARMICHAEL
Definition of KEBJE
The Board authorizes the issuance of a general 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 HAII, entitling such organization to vote the
stock which it owns or controls of the bank(s) named below
after the letter nBu at all meetings of shareholders of such
bank(s), subject to the condition(s) stated below after the
letter AC". The period within which a permit may be issued
pursuant to this authorization is limited to thirty days from
the date of this telegram unless an extension of time is granted
by the Board. Please proceed in accordance with the instructions contained in the Board's letter of March 10, 1947, (5-964).
Item No.
BOARD OF GOVERNORS
3
1/8/64
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
January
8, 1964
141... John L. Muething,
Keating, Muething & Klekamp,
Attorneys at law,
3701 Carew Tower,
Cincinnati 2, Ohio.
Dear Mr. Muething:
This refers to the request contained in your letter of
December lO, 1963, submitted through the Federal Reserve Bank of
Cleveland, for a determination by the Board of Governors of the
Federal Reserve System as to the status of American Financial Corporation, Cincinnati, Ohio ("Corporation"), as a holding company
affiliate.
From the information presented, the Board understands that
Corporation is engaged in the business of holding all of the permanent stock of two and all of the withdrawable shares of one, building
and loan associations; all of the outstanding stock of a general insurance agency; and substantially all of the capital stock of a life,
health and accident insurance company. In addition to the foregoing,
Corporation engages in various other activities including the leasing
of machinery and plant equipment, store and office furniture; owns
and manages a medium-size shopping center; and is developing a very
large shopping center. The Corporation further engages in some general
contract work principally in the erection of commercial structures in
the small retailing field. Corporation is a holding company affiliate
by reason of
the fact that it owns 2,450 of the 2,500 outstanding
shares of stock of The Athens National Bank, Athens, Ohio; that it
does not, directly or indirectly, own or control any stock of, or
manage or control any other banking institution.
In view of these facts the Board has determined that
acrporation is not engaged, directly or indirectly, as a business
in holding the stock of, or managing or controlling banks, banking
associations, savings banks, or trust companies within the meaning
of section 2(c) of the Banking Act of 1933 (12 U.S.C. 221a); and
accordingly, it is not deemed to be a holding company affiliate except
for the purposes of section 23A of the Federal Reserve Act and does
not need a voting permit from the Board of Governors in order to vote
the bank stock which it owns.
BOARD OF GOVERNORS Of THE FEDERAL RESERVE SYSTEM
Mr, John L. Muething
If, however, the facts should at any time indicate that
Corporation might be deemed to be so engaged, this matter should
again be submitted to the Board. The Board reserves the right to
rescind this determination and make further determination of this
matter at any time on the basis of the then existing facts, including
additional acquisitions of bank stocks, even though not constituting
control,
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
.•...0.0f......
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.
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, \\\ :
Item No. L.
BOARD OF GOVERNORS
1/8/64
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
..0
ADDRESS orriciAL CORRESPONDENCE
TO THE BOARD
•S.RESts:•*
•
•
January 9, 1964
Mr. George H. Ellis, President,
Federal Reserve Bank of Boston,
Boston, Massachusetts. 02106
Dear Mr. Ellis:
In response to your letter of December 30, 1963, you are
advised that the Board has approved your request for authorization
of legal fees not to exceed the sum of $15,000 to the firm of
Ropes & Gray in connection with administrative and legal proceedings
relating to an application by your Bank for abatement of real estate
taxes assessed by the City of Boston for calendar year 1963.
It is assumed that employment of special counsel in this
matter has been or will be authorized by your Board of Directors.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
Item No.
BOARD OF GOVERNORS
5
1/8/64
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
January 10, 1964.
Mr. Gordon W. Lamphere,
Assistant General Counsel,
Detroit Branch of the
Federal Reserve Bank of Chicago,
Detroit, Michigan. 48231
Dear Mr. Lamphere:
This refers to your letter of December 23, 1963, enclosing
copies of a letter from Counsel for the National Bank of Detroit
requesting a ruling as to whether, under section 22(g) of the Federal
Reserve Act and the Board's Regulation 0, it is necessary for the
board of directors of the bank to approve indebtedness to the bank
on the part of its executive officers represented by retail customers' accounts purchased by the bank from a large department store.
As an exception to the prohibition contained in section 22(g)
against loans by member banks to their executive officers, the section provides that a member bank may ,extend credit to an executive
Officer, and that such an officer may "become indebted" to the bank,
in .an amount not exceeding $2,500, with the "prior approval of a
majority of the entire board of directors" of the member bank.
While it is doubtful that Congress contemplated coverage
of indebtednesses of executive officers arising in the manner
described, it is the Board's view that the literal language of the
statute requires approval of such indebtednesses by the board of
d irectors
of the member bank in order to avoid a violation of the
statute.
However, the Board believes that compliance with the law
would be achieved by the adoption by the board of directors of a
r esolution generally approving any extensions of credit to, and
indebtedness awed to it by, any of its executive officers arising
from the general purchase by the bank of retail customers' accounts
f
.rom a designated store or stores, provided, of course, that such
indebtedness
of any officer, together with all other indebtedness
Owing by him to the bank, did not exceed $2,500.
BOARD Cr DOVERNORS OF THE FEDERAL RESERVE SYSTEM
Mr. Gordon W. Lamphere
-2-
In the light of its statutory authority to define the
term "indebtedness" for purposes of section 22(g), the Board is
considering an amendment to Regulation 0 that will expressly
exclude from the meaning of that term the indebtedness of any
executive officer arising in the manner above described.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
@FedFRASER