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1510 A meeting of the Board of Governors of the Federal Reserve SYstem was held in Washington on Wednesday, Tuly 29, 1942, at 1:45 p.m. PREsENT: Mr. Mr. Mr. Mr. Mr. Mr. Eccles, Chairman Ransom, Vice Chairman Szymczak McKee Draper Evans Mr. Mr. Mr. Mr. Morrill, Secretary Bethea, Assistant Secretary Carpenter, Assistant Secretary Clayton, Assistant to the Chairman The action stated with respect to each of the matters hereinter referred to was taken by the Board: The minutes of the meeting of the Board of Governors of the 'ca Reserve System held on Ally 28, 1942, were approved unanimously. Letter to the board of directors of "The Veedersburg State Banjo ) Veedersburg, Indiana, stating that, subject to conditions of RIBMbe. .LJ numbered 1 to 6 contained in the Board's Regulation H, the Board eLDDZ.01, - es the bank's application for membership in the Federal Reserve - ead for the appropriate amount of stock in the Federal Reserve - Of Chicago. Approved unanimously, together with a letter to Mr. Young, President of the Federal Reserve Bank of Chicago, reading as follows: ec "The Board of Governors of the Federal Reserve System .ePlioves the application of 'The Veedersburg State Bank', --eciersburg, Indiana, for membership in the Federal Reserve 1511 7/29/42 -2- "System, subject to the conditions prescribed in the enclosed letter which you are requested to forward to the Board of Directors of the institution. Two copies of such letter are also enclosed, one of which is for your files and the other Of which you are requested to forward to the Director, Department of Financial Institutions for the State of Indiana, for his information. "Since it is understood that in the State of Indiana trust funds deposited in the banking department of a bank are preferred claims in the event of liquidation of the bank, YOU are authorized, in accordance with the general authorization previously granted by the Board, to waive compliance with condition of membership numbered 6 until further notice. "While the volume of trust business is small and the rust department personnel is reported to be both adequate z?'11c1 competent, it has been noted that there is no duly deslgnated trust officer or trust committee and no record of any Nervision of the trust department by the bank's board. It 11.-s understood that you will follow the matter of the bank's ,eviaing its trust operations to conform to approved organlzation and procedure." Letter to the board of directors of the "State Street Bank kW Trust ComPanY") %lolls of 4 a4d Q,uincy, Illinois, stating that, subject to condi- nlembership numbered 1 to 6 contained in the Board's Regulation the following special condition, the Board approves the bank's 4Pl ication for membership in the Federal Reserve System and for the 114zopriat e amount of stock in the Federal Reserve Bank of St. Louis: 7. : riot Prior to admission to membership, such bank, if it has already done so, shall charge off or otherwise elimi;;re estimated losses of 0.,276.83, as shown in the report e examination of such bank as of May 18, 1942, made by an .eIlliner for the Federal Reserve Bank of St. Louis." Approved unanimously, together with a letter to Mr. Davis, President of the Federal Reserve Bank of St. Louis, reading as follows: 1512 7/29/42 -3- "The Board of Governors of the Federal Reserve System approves the application of the 'State Street Bank and Trust Company', Q,uincy, Illinois, for membership in the Federal Reserve System, subject to the conditions prescribed in the enclosed letter which you are requested to forward to the Board of Directors of the institution. Two copies such letter are also enclosed, one of which is for your flles and the other of which you are requested to forward to the Auditor of Public Accounts for the State of Illinois for his information. "It has not been the practice of the Board to prescribe generally a condition of membership to require prior apProval of distributions or payments on waived deposits, and lt ls felt that there are not sufficient reasons for prescribing such a condition in this case. However, the Reserve Bank, in the regular course of supervision, should of course undertake to see to it that unwarranted distributions are not made by the bank; And, on the other hand, the Re8srve Bank should also endeavor to see to it that full and Proper consideration is given to the rights of the waiving de positors. "It is assumed that you will follow the matter of the u41141 s bringing into conformity with the provisions of law acl the Board's regulations its requirements with respect ° savings deposit withdrawals." Z Letter to the board of directors of the "State Bank of —uurg", Hardinsburg, Indiana, stating that, subject to condiOf membership numbered 1 to 3 contained in the Board's Regulatioli, 41 the Board approves the bank's application for membership in the? ederal Reserve System and for the appropriate amount of stock in edoral Reserve Bank of St. Louis. Approved unanimously, together with a letter to Mr. Davis, President of the Federal Reserve Bank of St. Louis, reading as follows: "The Board of Governors of the Federal Reserve Systom ) 1 ,; aPProves the application of the 'State Bank of Hardins-'gt) Hardinsburg, Indiana, for membership in the Federal 1513 7/29/42 "Reserve System, subject to the conditions prescribed in the enclosed letter which you are requested to forward to the Board of Directors of the institution. Two copies of such letter are also enclosed, one of which is for your files and the other of which you are requested to forward to the Director, Department of Financial Institutions for the State of Indiana, for his inrormation. "It is assumed that you will follow the matter of the bank's reducing to within statutory limits the excess balElaces carried with nonmember banks." Letter to Mr. Hitt, First Vice President of the Federal Re"e Bank of St. Louis, reading as follows: "The Board approves a reduction to not less than 0220,000 in the preferred stock of the Southwest Bank of St. Louis, St. Louis, Missouri. Approval is given with the understanding, of course, that the reduction is effected in accordance with the plan submitted with your letter 3, 1942, and that your counsel is satisfied as to " . 0 legal aspects involved." Approved unanimously. Letter to Mr. Hult, Vice President of the Federal Reserve }41111C evc. --.- Boston, reading as follows: "In connection with the question of preserving old ,1:ecords for the purposes of Regulation W, a letter has ren received from a Federal Reserve Bank saying that a rust company in its district proposes to destroy periodic4117 loan applications, credit reports and correspondence, ! olloction material, work papers and memoranda, in connec"-on with the various instalment loans which have been reaid, in full. They propose to retain accounting records definitely, such as discount ledger, check ledger and Ileral journal and ledger records, all entries reflecting eN1qment of loans and the ledger cards on which repay1 snts are posted, as well as Statements of Borrower and .,'tements of Necessity obtained in connection with these -Loans. r th "The Board has not yet prescribed any rules regarding e keeping of records, pursuant to section 12(h) of the Re Et gulation. Moreover, section 12(i) is broad enough to 4thorize the Board to require the production of any papers 1514 7/29/42 -5- "in connection with any paid-up loan. However, the matewhich the trust company intends to retain would seem to include everything reasonably necessary to enable the examiner to determine whether or not there had been comPliance with Regulation W. The question is one which concerns the Federal Reserve Banks more directly than the Board, and therefore the Board will certainly wish to have their views before expressing an opinion. Consequently, will be appreciated if you will furnish the Board with such comments as you may wish to make regarding the above Proposal." Approved unanimously, with the understanding that identical letters would be sent to the officers in charge of Regulation W at all of the other Federal Reserve Banks except Cleveland. Letter to Mr. Fry, Vice President of the Federal Reserve Bank Richmond, readine, as follows: "This refers to your letter of July 21, 1942 concerning the request by several of the financial institutions in Your district that they be permitted to use up their sup?lies of the old Statement of Borrower, Form F. R. 564. hese institutions wish to continue the practice of using tile old forms with certain corrections after July 31, 1942 114en, according to the Board's letter of May 11, 1942, the new Form F. R. 564-a is mandatory. 1111 :This is the only request for such permission which been received and we doubt that the wastage eliminated wcluld be so substantial as to warrant the action. Such an 1113Proval involves a complicated procedure, the cost of which w°111d be likely to exceed by far the savings in paper. For it would involve filing a record of the action with 1Te Federal Register and this in itself would result in the se Of a great deal of paper. "In view of the fact that the lenders were given almost tree months to use up their old supplies and were warned in ' 84.1e box at the top of the specimen form that they should not ci" ) ek large supplies, it would appear that the Board had tne as much as it could to prevent any widespread waste of mls kind." Approved unanimously. 151_5 7/29/42 -6Letter to Mr. Gilmore, Assistant Cashier of the Federal Re- 88rVe Bank of St. Louis, reading as follows: "Receipt is acknowledged of your letter of July 20 asking whether the acceptance of postdated checks would azount to a written agreement complying with section 5(d)(2) of Regulation W regarding the curing of a default in a charge account. "The Board agrees with you that although a postdated Check would be evidence in writing of an agreement as described in section 5(c)(2), the postdated checks would not constitute 'a written agreement' as described in section 5(d)(2). "A postdated check can be evidence of an agreement so as,to satisfy the Statute of Frauds, but the phrase 'a !irltten agreement' in section 5(d)(2) refers to a contract 111 writing and not merely a 'note or memorandum' of the a greement." Approved unanimously. Thereupon the meeting adjourned. Secretary.
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