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Minutes for June 17, 1959 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. A Chin, Martin Gov. Szymczak Gov. Mills Gov, Robertson Gov. Balderston Gov, Shepardson Gov. King Minutes of the Board of Governors of the Federal Reserve System on Wednesday, June 17, 1959. PRESENT: Mr. Mr. Mr. Mr. The Board met in the Board Room at 10:00 a.m. Szymczak, Acting Chairman Robertson Shepardson King Mr. Sherman, Secretary Mr. Johnson, Director, Division of Personnel Administration Mr. Allen, President, Federal Reserve Bank of Chicago Meeting with Mr. Allen. President Allen had asked to meet with the ID 4Jo8rd to present informally certain proposed personnel changes at the Federal. Reserve Bank of Chicago incident to pending retirements. These proposals were explained and discussed, and it was Understood that in due course the Board might expect to receive a e°111rnunioation or communications from the Reserve Bank which would 813ecifY -what actions had been taken by the Board of Directors and 1'Ni-test the approval of the Board of Governors. President Allen and Mr. Johnson than withdrew from the meeting e'lldi'lessrs. Kenyon, Assistant Secretary; Hackley, General Counsel; Rezt er, Assistant General Counsel; Nelson, Benner, and Goodman, ASSiStant Directors, Division of Examinations; and Thompson, Super0Y Review Examiner, Division of Examinations, entered the room. Discount rates. The establishment without change by the l'ecleral Reserve Bank of Minneapolis on June 12, 1959, and by the 6/17/59 -2- Federal Reserve Bank of Boston on June 15) 1959, of the rates on discounts advances in their existing schedules was approved unanimously, with the understanding that appropriate advice would be sent to those Banks. Items circulated to the Board. The following items, which had been circulated to the Board and copies of which are attached to these minutes under the respective item numbers indicated, were approved unanimously: Item No. 1:etter to Bank of America, New York, New York, T.;,!arding the location of its branch in K1]sla `44P1117, Malaya. : L tter to the Bank of Passaic and Clifton, Clifton, approving the establishment of a branch 5°5 Allwood Road in Clifton simultaneously with the removal of its head office from that location u-L5 Main Avenue in Passaic. Lett er to the Farmers and Merchants State Bank ;; Bushnell, Bushnell, Illinois, approving its qUest for permission to exercise fiduciary pove 1 2 3 r8. Lett cleme: to The Mount Clemens Savings Bank, Mount Michigan, approving an investment in premises. tette, to the Comptroller of the Currency rec?mto '14g favorably with respect to an application °I'garlize a national bank at Fort Knox, Kentucky. Letter 4, that the Bureau of the Budget recommending tor e. Proposed statute to eliminate the necessity tutj? l testing domestic drafts and checks be sUbGov -Lk for the consideration of the Council of State er nments. 41enfl.' 4 5 6 6/17/59 -3Item No. Letter to the Federal Reserve Bank of New York . ._ nterposing no objection to proposed changes in che foreign travel program of its staff. 7 Letter to the Independent Bankers Association, 2auk Center, Minnesota, regarding the status of e International Bank of Washington under the 'allk Holding Company Act. 8 Messrs. Nelson, Goodman, and Benner then withdrew from the Meetings ?s_pplicability of section 6(a)(2) of Bank Holding Company Act Items 9 and 10). First Security Bank of Idaho, Boise, Idaho, a Sub sdiarY of First Security Corporation, had asked the Board in a letter dated Janua 6, 1959, whether the Bank Holding Company Act 11°111d Prohibit it from making advances secured by collateral consisting Qf (1) a time certificate of deposit issued by, or an assigned savings e.ce°1111t in, another banking subsidiary of First Security Corporation, (2) an assigned passbook issued by a savings and loan association Which was a subsidiary of the same bank holding company. Specifically, the First Security Bank of Idaho stated that it received from time to time requests to make extensions of credit secured by collateral Co481-Stin -g of (a) time certificates of deposit of the First Security 13a4k Of Utah; (b) assigned savings accounts of the latter bank; or (c) assi n ed Passbooks of First Security Savings and Loan Association, l'c)cateil --0, Idaho, and First Security Savings and Loan Association, 6/17/59 salt Lake City, Utah. All of these organizations were subsidiaries of First Security Corporation. It was understood that First Security /3ank of Idaho did not have any outstanding loans secured by the aforecollateral. With respect to time certificates of deposit, a similar question had been asked by Walker Bank and Trust Company, Salt Lake City, Utah, a subsidi of Firstamerica Corporation. There had been distributed to the Board a memorandum from the legal Division dated June 12, 1959, discussing the questions raised in the light of the provisions of section 6(a)(2) of the Bank Holding 8 Act, which provides that it shall be unlawful for a bank to 0°111P.nY ' eecePt the capital stock, bonds, debentures, or other obligations of a bank holding company of which it is a subsidiary, or of any other 81-lbsid1arY of such bank holding company, as collateral security for ajcivEulees made to any person or company. In the opinion of the Legal ' 1°n, the prohibition of section 6(a)(2) would apply to loans 8eellred by time certificates of deposit, savings account4 or passbooks 4 sEtvings and loan association under circumstances such as described 14 the material that had been presented to the Board. Submitted with the efliorandum were drafts of letters to the First Security Bank of - and to the Federal Reserve Bank of San Francisco reflecting the Legal D ivision's opinion. 6/17/59 In comments on the matter, Messrs. Hackley and Hexter brought out that the questions raised with the Board presented difficult Problems of interpretation, and that the legal staff had studied celsertalywtether there appeared to be any basis for finding that the prohibition of section 6(a)(2) would not be applicable. However, tor the reasons discussed in the memorandum, it was the conclusion of the staff that the reference in section 6(a)(2) to "other obligations" brust be regarded as including instruments of the kind under consideration. There being no disagreement with the Legal Division's analysis 441 conclusions, unanimous approval was given to (1) the proposed letter tc/ the First Security Bank of Idaho, with a copy to the Federal Reserve 13411k of San Francisco, and (2) the proposed letter to the San Francisco Reserve Bank dealing with the question raised by Walker Bank and Trust C°111P821Y- Copies of the approved letters are attached as Items 9 and respectively. Mr. Thompson then withdrew and Mr. Molony, Special Assistant to the Board, entered the room. Letters from Senator Proxmire. It was brought to the attention Of the Board that at least one Board member and several members of the ''444 8 Staff had received letters under date of June 15, 1959, from 8e114tor Proxmire of Wisconsin, who invited their answers to several qUesti °Ils having to do with the possibilities and limitations of 4431*t4117 Policy as a tool of economic policy for the Federal Government. 6/17/59 -6- No canvass had been made to determine exactly how many persons within the Board's organization were in receipt of such letters. However, the 'lames of those who had reported receiving the communication indicated the possibility that the mailing list was drawn up from the membership °f some national professional organization. After discussion, it was the view of the Board that the letters should be handled by the individuals concerned in their own discretion. Mr. Molony then withdrew from the meeting. Pan American Bank of Miami. Governor Robertson reported receipt yesterday afternoon of a telephone call from Mr. Mann, a representative °f Glore, Forgan and Co., who related that he had just received a tele€Cralll from Mr. James Sottile, Jr., with regard to the proposed underwriting °f a stock issue of South Dade Farms, Inc., through which capital would be v.uovided to that corporation's subsidiary, the Pan American Bank of Miami, Florida, as well as other banks in the Sottile group. The telegram advised in effect that negotiations with respect to the 151‘°13°sed stock issue were thereby terminated, for reasons to be set forth in a subsequent letter. The representative of Glore, Forgan irdie ated that the sending of the telegram might have reflected the dela Ys that had been encountered in connection with negotiations for the 8 ale of stock, or it might be that Mr. Sottile was unwilling to 11.QCe1,4. -mk. the conditions laid down by Glore, Forgan incident to going thro 4g114 with the financing operation. Mr. Mann asked that the telephone _7_ 6/17/59 call be treated as confidential because he felt that official information on the matter should come to the Board from South Dade Farms and the Pan American Bank. Governor Robertson said he considered that the telephone cs11 came to him as a representative of the Federal Reserve System and that it Igast appropriate to report the information 'within the System but not °Iltside. Accordingly, he had spoken to Messrs. Masters and Benner of the Division of Examinations and to President Bryan of the Federal Reserve Bank of Atlanta, authorizing the latter to discuss the matter /41th Vice President Denmark but no other party. He suggested to Mr. /31'Yan that if nothing were heard from Pan American by Friday of this Ireek, it would seem appropriate for Mr. Denmark to go to Miami and incluire of the member bank concerning the status of the financing Program. Then, assuming that the facts warranted such a course, it 1.7°11-1-d be his suggestion that a meeting of representatives of the Board, the pederal Reserve Bank, and the Florida State banking authorities be at which time consideration might be given to cslling a fleeting of the Board of Directors of the Pan American Bank to discuss the situation. From that point, a further step might be to arrange a With representatives of the insurance company having control °t the stock of Pan American, with the State banking authorities l'el34‘esented, 6/17/59 -8Governor Robertson stated that at this point he simply wished to advise the other members of the Board of the information that he had received. He did not feel that it would be appropriate to notify the Federal Deposit Insurance Corporation until some word had been received fr°111 Pan American and he had no advice as to whether examination reports Of Pan American were actually sent by that bank to Glore, Forgan and Co. Currency vault. Governor Robertson referred to the circulation t° the members of the Board of a copy of a letter from Chairman Robertson Of the Senate Banking and Currency Committee to the Secretary of the TreasurY in which the former indicated that he would not be favorably d1sPosed toward the introduction of a bill to construct an emergency cUrreticY vault at Fort Riley, Kansas, with funds to be supplied on a reimbursable basis by the Federal Reserve System, and that the appro13rie•te basis would be for the Treasury to seek an appropriation for the Project. The position taken by Senator Robertson indicated to Governor 11°bertson that alternative plans for the decentralization of an etleraency suPply of currency would have to be devised. He then utlin Possible program for utilizing vault space to be created the Purpose at certain Federal Reserve Bank branch buildings and stet^. that he would like to discuss the matter further next week when ' 41.1 or „ une members of the Board were present. 6/17/59 _9Governor Shepardson said that he would like to discuss, when Etta]. Board was available, plans for the construction of a shelter t the property owned by the Board across C Street. The meeting then adjourned. Secretary's Notes: Pursuant to the recommendation contained in a memorandum dated June 9, 1959, from Mr. Noyes, Adviser, Division of Research and Statistics, Governor Shepardson today granted permission to Edward J. Kane, Research Assistant in that Division, to work part-time as a salesman for William Hahn and Company. Governor Shepardson also noted on behalf of the Board that applications for retirement, effective July 1, 1959, had been filed by F. A. Walker, Supervisor, Settlement and Currency Section, Division of Bank Operations, and Louis N. Bertol, Captain of the Guard, Division of Administrative Services. BOARD OF GOVERNORS OF THE Item No. 1 6/17/59 FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD June 17, 1959. 14r. Tom B. Coughran, EXecutive Vice President, Bank of America, 40 Wal1 Street, New York 151 New York. Dear Mr. Coughran: This will acknowledge your letter of June 1, 1959, tr Aansmitted through the Federal Reserve Bank of New York, ::nsing that the authorities in Malaya had approved the lishment of a branch of your Bank in the Federation of and that your Bank would open a branch in Kuala Lumpur, ration of Malaya in temporary .u.00r quarters in the ground area of Hotel Rio, adjacent to Kong Yik (Selangor) Bar ,ing Corporation, at the corner of High and Cross Streets. br -Ls noted from your subsequent letter of June 5 that the anch opened for business on June 1, 1959. The Board of Governors notes, with approval, that the branch in permanent quarters in an relocatf r Ce %old D in the Asia a In0 Building corner of Klyne and th„"cads, during the latter part of 1959. Please advise Re;...oard of Governors in writing, through the Federal of York, when the branch is removed to Pe:rv:rvittaeNr.r.T Yo-ti Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. BOARD OF GOVERNORS ,e17:01,4 OF THE t.44./.4-044.44 FEDERAL RESERVE SYSTEM , Item No. 2 6/17/9 WASHINGTON 25, D. C. 4A4--44.bilt!;-,, 01, ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD ti4oto* June 17, 1959. Board of Directors, Bank of Passaic and Clifton, Clifton, New Jersey. Ge ntlemen: Pursuant to your request submitted through the Federal Reserve Bank of New York, the Board of Governors (1 , 3proves the establishment of a branch at 505 Allwood Road, ' -lj-ft°/11 New Jersey, by Bank of Passaic and Clifton, 1C „lifton, New Jersey, simultaneously with removal of its : 4 ead office operations from that location to 615 Main "enue, Passaic, New Jersey. Very truly yours, (Sip-,nd) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. BOARD OF GOVERNORS OF THE Item No. 3 FEDERAL RESERVE SYSTEM 6/17/59 WASHINGTON 25, D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD June 17, 1959. Board of Directors, Parmers and Merchants State ,Bank of Bushnell, uushnell, Illinois. Gentlemen : This refers to your request 1.,r permission, under -icable provisions of your condition of membership numbered 3 60 exercise fiduciary powers. n Following consideration of the information submitted, the Boa permi I'd of Governors of the Federal Reserve System grants exe on to Farmers and Merchants State Bank of Bushnell to e all trust powers now or hereafter authorized under the terms of its charter and laws of the State of Illinois. Very truly yours, (Signed) KennethA. Kenyon Kenneth A. Kenyon, Assistant Secretary. BOARD OF GOVERNORS OF THE Item No. 4 FEDERAL RESERVE SYSTEM 6/17/59 WASHINGTON 25, D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD June 17, 1959. Board of Directors, TRIle Mount Clemens Savings Bank, ''1°unt Clemens, Michigan. Gentlemen: Pursuant to your request submitted through the 'Pederal th P.eserve Bank of Chicago, the Board of Governors of the Federal Reserve System approves, under the provisions i Section 24A of the Federal Reserve Act, an additional ciTi"tmnt in bank Dremisesof $1.38,405.114 by The Mount i,eTeas Savings Bank, Mount Clemens, Michigan. This amount, a-, coi -°L1d 11 the cost of land, represents the.cost.of erecting n,ranoh office at 43727 North Gratiot Avenue, Mount '4-Lemens, Michigan. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. BOARD OF GOVERNORS ) C.441 OF THE Item No. 5 FEDERAL RESERVE SYSTEM gt% 6/17/59 WASHINGTON 25, D. C. ADDRESS OFFICIAL CORRESPONDENCE "Vt'Atl.t0 TO THE BOARD June 17, 1959. rep!mptroller of the CurrencY, .t''easl-lrY Department, "QlsIlington 25, D. C. Attention Mr. G. W. Garwood, Deputy Comptroller of the Currency. Dear Mr. Comptroller: office dated Februa, Reference is made to a letter from your a nat4,Y 27, 1959, enclosing copies of an application to organize Ilmti.'"al bank at Fort Knox, Kentucky, signed by Mr. Clarence W. Or' 11%and associates, and requesting a recommendation as to whether (3'" the application should be approved. . Information contained in a report of investigation of the a of stP0-3 cation made by an examiner for the Federal Reserve Bank to the L°uis indicates generally favorable findings with respect Pact, Proposed capita] structure of the bank, its earnings pros' and the need for a bank in this community. It appears that banki:,1 Tnaj°ritY of the proposed directors are inexperienced in agem -g O perations, and therefore well-qualified executive mantant will be needed. The executive vice president selected appes the 4 rs to be experienced but was not available at the time of raenci;nvestigation. Accordingly, the Board of Governors recomPort KaPProval of the application to organize a national bank at to 4°)c) Kentucky, provided the management situation is resolved 'e satisfaction of your office. The Board's Division of Examinations will be glad to dis' s_asyects of this case with representatives of your office if yoll u uesire. Etti Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. BOARD OF GOVERNORS OF THE Item No. 6 FEDERAL RESERVE SYSTEM 6/17/59 WASHINGTON 25, D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARO June 17, 1959. Raoul Archambault, Jr., 1.2istant Director, 1,71 eall of the Budget, - ningtOn 25, " D. C. 1)e41 'M. Archambault: Februa, In the Board's reply of April 6, 1959, to your letter of tjme Y 27, 1959, it was indicated that the Board did not at that to '„'nc44 of any proposals for State legislation that it would desire W'esent for consideration by the Committee of State Officials on tgested State Legislation of the Council of State Governments. Since the date of the Board's letter, the Executive Counc;, dati of the American Bankers Association has approved a recommenena c'n made by the Association's Committee on State Legislation for lier • ent by the States of a proposed uniform statute amending the recu-Lable Instruments Law to eliminate the necessity of protest with 0,42t to domestic drafts and checks. We understand that the ABA varic;;:tee has transmitted copies of the proposed statute to the ena 2's State bankers associations urging that they sponsor its Co . The proposed statute was drafted in collaboration with a IrQltte -ank e of the Conference of Presidents of the Federal Reserve the In the opinion of the Board, enactment of this statute by arious States would be desirable. sqb Accorddngly, the Board recommends that this proposal be 'ed to the Committee of State Officials on Suggested State tion:tati°fl of the Council of State Governments for its considera10,,eC ci0Pies of the proposed statute and accompanying statement are Very truly yours, (Signed) Merritt Sherman Herritt Sherman, Secretary. BOARD OF GOVERNORS OF THE lifeAN% Iv 0 Item No. 7 6/17/59 FEDERAL RESERVE SYSTEM *0: WASHINGTON 25. D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD tattt 5,0* June 17, 1959. irs William H. Braun, Jr., tuecretary, Federal Reserve Bank of New York, New York 45, New York. Dear Mr. Braun: This is to acknowledge your letter of June 5, 1959, rEKtardin g alterations made in the foreign travel plans of the :111cor5 and members of the staff of the Federal Reserve Bank v4 New York during the remainder of 1959 and early 1960. The Board of Governors interposes the arrangements outlined in your letter. no Objections to Sincerely yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. BOARD OF GOVERNORS OF THE Item No. 8 FEDERAL RESERVE SYSTEM 6/17/59 • WASHINGTON 25, D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD Mr, Ben DuBois, Secretary, The Independent Bankers Association, Sauk Centre, Minnesota. June 17) 1959. Dsax Mr. DuBois: This refers to your letter of May 28, 1959, in which you inquir b. n. e, in effect, whether the International Bank of Washington, is subject to the Bank Holding Company Act of 1956 or whether it la excluded by virtue of section 25(a) of the Federal Reserve Act. excludes from the (1.....c.4 Section 2(c) of the Bank Holding Company Act under operating organization ecti-llnition of the term "bank" any International the However, Act. 25(a) of the Federal Reserve an ' of Washington is not such an organization. Even if it were such de,°rganizatien, it would not for that reason be excluded from the orlition of a "company" or a "bank holding company" for purposes Act. It Waehi e appears, however, that the International Bank of by r-ngt°n is excluded from the definition of a "bank holding company" eaecn of other provisions of the Act. On the basis of information informally obtained from the trities and Exchange Commission, it appears that the International rnent (?,if Washington is "affiliated", within the meaning of the InvestPrior-2mPanY Act of 1940, with a company registered under that Act av • "° May 15, 1955. Moreover, on the basis of the information to the Board, the International Bank of Washington does not cr m "-LY own 25 per cent or more of the voting shares of each of two Inid4! r banks. The Bank, therefore, is not a bank holding company tion „Ile Bank Holding Company Act because of the provisions of secof that Act which state that No company shall be a bank holding company which is 'egistered under the Investment Company Act of 1940, ,nd was so registered prior to May 15, 1955 (or which affiliated with any such company in such manner as 0 ;constitute an affiliated company within the meaning such Act), unless such company (or such affiliated company), as the case may be, directly owns 25 per centum h2c)ra of the voting shares of each of two or more k12 U.S.C. 1841) Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. BOARD OF GOVERNORS OF THE Item No. 9 FEDERAL RESERVE SYSTEM 6/17/59 WASHIN(,TON 25, D. C. ADDRESS OFFICIAL CORRESPONDENCE ro HOARD Juno 17, 1959 AIR MAIT Mr. Elden Stirnweis, Vice President, First Security Bank of Idaho, sel Idaho. Dear Mr. Stirnweis: This relates to your inquiry of January 6, 1959 as to whether the Bank Holding Company Act of 1956 prohibits your bank from making an t ension of credit secured by collateral consisting of time certifi0,:es of deposit or savings accounts of First Security Bank of Utah, ssbooks of First Security Savings and Loan Association, Pocatello, ti‘ 4441 ,_11.°2 and First Security Savings and Loan Association, Salt Lake City, Z Section 6(a)(2) of the Holding Company Act prohibits a bank that 4 Ilea 4 -48 a subsidiary of a bank holding company from accepting the mibrIal stock, bonds, debentures, or other obligations" of any other !'diarY as collateral security for advances made to any person or comt aec!..44Y. It seems clear that certificates of deposit and savings thi'unta of the First Security Bank of Utah represent "obligations" of ct bank and, on the basis of information furnished the Board regardthe sa4 provisions contained in a passbook issued by the First Security and suchngs Loan Association, Pocatello, Idaho, it appears also that a represents an obligation of that Association. tion , It is also to be noted (1) that the last paragraph of secpurv.uka) clearly implies that interest-bearing deposits are within the tran ew of the prohibitions of section 6(a) relating to intra-system t an-actions, and (2) that section 6(a) is directed not only against alsjactions directly between two units of a holding company system but obit against advances by a holding company bank on the security of gations of othnr organizations in the same system. ilillge opinion of the Board of Governors, section 6(a)(2) of ii11 0114t CO Company Act forbids extensions of credit by holding ot4nY banks on the security of the above-described obligations of inEititutions that are subsidiaries of the same holding company. the Very truly yours, (Signed) Merritt Sherman Merritt Sher,' Secretary. BOARD OF GOVERNORS 0****4 OF THE M4444 0 1 WASHINGTON 25, D. C. 511 , 04,;46 Item No. 10 6/17/59 FEDERAL RESERVE SYSTEM 0* 4 ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD tta 6 4404 June 17, 1959 AIR YAIL R. N. Mangels, President, -Qe eral Reserve Bank of San Francisco, ' 'Jan F rancisco 20, California. Lear Mr. Mangels: This refers to your telegram of May 20, 1959, referring, Part in . 3 to Mr. Swan's telegram of Flarch 25, 1959, relating to an 8iccluerY from Walker Bank and Trust Company, Salt Lake City, a sub4_17 of Firstamerica Corporation, as to whether section 6(a)(2) of ,, a banking subsidiary of b'ue B1,ank Holding Company Act prohibits a ' bank of credit secured extension holding company from making an or acollateral consisting of a time certificate of deposit issued by, hoidisavings account in, another banking subsidiary of the same bank ng company. a bank Section 6(a)(2) of -the Bank Holding Company Act prohibits that is a subsidiary of a bank holding company from accepting the " oth,, caPital, stock, bonds, debentures, or other obligations!' of any aciv;r subsidiary of such holding company as collateral security for lces made to any person or company. It seems clear that certificatelf, 'o °f deposit and savings accounts of a commercial bank represent ft bi? 1 of lgationsl that bank. section 6 It is also to be noted (1) that the last paragraph of (a) clearly implies that interest-bearing deposits are Kthi illtrari the purview of the prohibitions of section 6(a) relating to 041:y sYstem transactions, and (2) that section 6(a) is directed not N4aagain6t transactions directly between two units of a holding thrlY system but also against advances by a holding company bank Ell.E1-LL._211 obligations of other organizations in the same ..6ir- or the B In the opinion of the Board of Governors, section 6(a)(2) holding °mPar 1.1.1k Holding Company Act forbids extensions of credit by other .J, uanks on the security of the above-described obligations of J-rIstitutions that are subsidiaries of the same holding company. It would be appreciated if you would transmit the substance letter to Walker Bank and Trust Company, Salt Lake City, Utah. of tilt, Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary.
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