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252 Minutes of actions taken by the Board of Governors of the Federal Reserve System on Monday, July 18, 1955. The Board met in the Board Room at 2:00 p.m. PRESENT: Mr. Mr. Mr. Mr. Balderston, Vice Chairman Szymczak Vardaman Shepardson Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Carpenter, Secretary Kenyon, Assistant Secretary Thurston, Assistant to the Board Riefler, Assistant to the Chairman Vest, General Counsel Sloan, Director, Division of Examinations Hexter, Assistant General Counsel Hostrup, Assistant Director, Division of Examinations Masters, Assistant Director, Division of Examinations Cherry, Legislative Counsel At the meeting on July 15, 1955, consideration was given to a Preliminary draft of statement which might be presented by Vice Chairman Balderston on behalf of the Board before the Subcommittee on Welfare and Pension Funds of the Senate Committee on Labor and Welfare. In view of suggestions made at that time, a revised draft was prepared and copies thereof were sent to the members of the Board prior to this meeting. Governor Balderston reported that a letter had been received today from the Subcommittee containing a formal request for testimony on Wednesday, July 20, and listing nine topics which the Subcommittee would like to have covered in the statement presented by the Board's 7/18/55 -2- representative. He then distributed to the other members of the Board copies of that portion of the letter listing the several topics. In discussing whether the testimony should be presented in a form which would set forth the Subcommittee's topics and the comments Of the Board concerning them, Governor Balderston pointed out that the majority of the questions already were covered in the draft of statement now before the Board. Some of the remaining questions were of such a nature that it would be inappropriate for the Board to offer comments, and other questions could not be answered because no information was available to the Board. For the reasons outlined by Governor Balderston and also because the nine topics mentioned in the Subcommittee's letter did not appear to cover the field of inquiry comprehensively, it was agreed that the statement to be presented should be in the general form of the present draft. The draft was then reviewed and a number of suggestions were made for additions, deletions, and editorial changes. At the conclusion of the discussion, it was agreed unanimously that the staff should revise the draft in the light of the comments made at this meeting and that the statement which was presented should be in a form satisfactory to Vice Chairman Balderston. Mr. Masters then withdrew from the meeting. • 7/18/55 _3.. Mr. Vest reported that a new draft of bank holding company bill (a so-called committee print) had been prepared by the staff of the Senate Banking Subcommittee and that a copy was made available to him On Saturday, July 16. He said that Senator Robertson had indicated to Governor Robertson in a letter dated July 14 that the committee print was being drafted, that in his reply Governor Robertson advised that he would be away from his office after July 15, and that Governor Robertson also called Senator Robertson on the telephone. Mr. Vest understood that during the telephone conversation some of the provisions of the committee print were discussed in general terms and that Governor Robertson expressed views consistent with the position taken by the Board on bank holding company legislation. Mr. Vest also said that the Banking SUbcommittee was to meet in executive session at 10:00 a.m. tomorrow and that he and Mr. Hexter had been asked to be available should the Subcommittee wish to direct any questions to them. It was his thought that they would respond to any inquiries involving policy on the basis of views previously expressed by the Board. Mr. Vest then outlined the differences between the committee print arid S. 2350. One of the principal differences was that in the committee Print, as in H. R. 6227, the definition of a bank holding company would be one based on ownership of 25 per cent or more of the stock of two or more banks. The committee print also contained a provision which would require, with certain exceptions, that the purchase by a holding company 1255 7/18/55 Of bank stock must be approved by the Board and by either the Comptroller of the Currency or the respective State banking authorities depending on whether the banks involved were national or State banks; and if such aPproval was not given by the Comptroller or the State authorities, as the case might be, the Board would be required to hold formal hearings. Mr. Vest brought out that the procedure would be time-consuming and that it could involve difficult and burdensome administrative problems. He said Governor Robertson also had pointed out to Senator Robertson that the inclusion of such a provision might have the effect of creating friction between the various bank supervisory authorities. At this point Governor Vardaman withdrew from the meeting. In a discussion concerning the points raised by Mr. Vest, it was suggested that an effort be made to contact Senator Robertson tomorrow morning and express the Board's concern regarding the hearing procedure provided in the committee print. At the conclusion of the discussion, it was agreed that the Board should meet at 9:00 a.m. tomorrow morning for a further discussion when Chairman Martin and Governor Vardaman could be present. The meeting then adjourned. Secretary
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