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Minutes for
To:
Members of the Board
From:
Office of the Secretary
June 22, 1965
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 minutelt
Chm. Martin
Gov. Robertson
Gov. Balderston
Gov. Shepardson
Gov. Mitchell
Gov. Daane
Gov. Maisel
.15.•••
Minutes of the Board of Governors of the Federal Reserve
System on Tuesday, June 22, 1965.
The Board met in the Board Room
at 10:00 a.m.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Martin, Chairman
Robertson
Shepardson
Daane
Sherman, Secretary
Kenyon, Assistant Secretary
Noyes, Adviser to the Board
Brill, Director, Division of Research
and Statistics
Director, Division of Examinations
Solomon,
Mr.
Assistant
General Counsel
Mr. Hexter,
Assistant
General Counsel
Mr. O'Connell,
Division
of International
Adviser,
Mr. Sammons,
Finance
Mr. Goodman, Assistant Director, Division of
Examinations
Mr. Smith, Assistant Director, Division of
Examinations
Mrs. Semia, Technical Assistant, Office of the
Secretary
Mr. McClintock, Supervisory Review Examiner,
Division of Examinations
Mr. Goodfellow, Review Examiner, Division of
Examinations
Mr.
Mr.
Mr.
Mr.
Discount rates.
The establishment without change by the Federal
Reserve Bank of Boston on June 22, 1965, of the rates on discounts and
advances in
its existing schedule was approved unanimously, with the
und erstanding that appropriate advice would be sent to that Bank.
Application of Continental International Finance Corporation
Item No.
1).
Unanimous approval was given to a letter to Continental
te rnational Finance Corporation, Chicago, Illinois, granting its request
for
consent to purchase and hold 180,000 additional shares of Banca
6/22/65
-2-
Privata Finanziaria, Milan, Italy, at a cost of approximately $145,000.
4 copy of the letter is attached as Item No. 1.
Mr. Sammons then withdrew from the meeting.
Report on competitive factors (Fargo, North Dakota).
A report to
the Federal Deposit Insurance Corporation on the competitive factors
involved in the proposed acquisition of certain assets and assumption of
certain liabilities of Bankers State Bank and Trust Company by Fargo State
Bank, both of Fargo, North Dakota, was approved unanimously for transmittal
to the Corporation.
The conclusion read as follows:
The proposed acquisition of certain assets and
assumption of certain liabilities of Bankers State
Bank and Trust Company, Fargo, North Dakota, by Fargo
State Bank, Fargo, North Dakota, would have no adverse
effect on competition.
Request of California State Banking Department (Item No. 2).
There
had been distributed copies of a letter of June 18, 1965, from the Federal
Reserve Bank of San Francisco in regard to the request of the State Banking
DePartment of California for copies of certain correspondence and documents
4
a
the Reserve Bank's files relating to Frontier Bank, Covelo, California,
°nmember insured bank that was placed in receivership in July 1964.
The Department had indicated that the material would not be made public
but was
needed to prepare a chronological record of events leading to the
elosing of Frontier Bank.
However, the Reserve Bank noted that it was
P°8sible that the documents ultimately might be subpoenaed in connection
llith an investigation of the closing of the bank by a State Court Grand
jurY.
6/22/65
-3Mr. O'Connell commented on the background of the request, stat-
ing that the Reserve Bank would like to comply if authority was given
by the
Board.
He pointed out that the material included a letter of
April 12, 1962, addressed by Frontier Bank to the Federal Deposit Insurance Corporation, with a copy sent to the Federal Reserve.
If the Board
Rave permission for release of the material, he suggested that it might
wish to let the Corporation know that the letter was included.
After discussion the Board authorized compliance by the San
4ancisco Reserve Bank with the State Banking Department's request, it
being understood that the Federal Deposit Insurance Corporation would
be informed that the letter Mr. O'Connell had mentioned was among the
documents to be furnished.
Attached as Item No. 2 is a copy of the
telegram that apprised the Federal Reserve Bank of San Francisco of the
lloard's authorization.
Messrs. O'Connell, Goodman, McClintock, and Goodfellow then
wi
thdrew from the meeting.
Country bank sample for reserve estimates (Item No. 3).
There
had
been distributed a memorandum dated June 21, 1965, from Mr. Noyes
l'ecarding
the country bank sample for improving reserve estimates, which
had been used experimentally since December 1964 under instructions in
the Board's letter of October 16, 1964, to the Federal Reserve Banks.
The
Illem°randum cited a number of respects in which experience with the sample
had
been favorable, and stated that the System ReEearch Advisory Committee
6/22/65
-4-
recommended that the sample be continued on a permanent basis after
June 30, 1965, when the period for which its experimental use had
been authorized would expire.
The Chairman of the Presidents' Con-
ference Committee on Research and Statistics concurred.
After discussion, the recommendation was approved unanimously.
A copy of the letter informing the Federal Reserve Bank Presidents of
this action is attached as Item No. 3.
Destruction of unfit Federal Reserve notes.
Mr. Solomon
rePorted that the Treasury Department had asked to be allowed access
to
portions of reports of examination of Federal Reserve Banks relating
to the currency destruction function.
by
The Department had been requested
Chairman Patman of the House Committee on Banking and Currency to
furnish information on recommendations made by the Treasury to the
Reserve Banks, for use in connection with consideration of proposed
le gislation providing for destruction of unfit Federal Reserve notes
at the Federal Reserve Banks.
Although the Treasury Department specified
he Procedures followed by the Reserve Banks in destroying Treasury currencY, made inspection visits, and received copies of Reserve Bank
reports, the Department wished to check its own records against
the Reserve Bank examination reports in the interest of completeness.
There was unanimous agreement that the request of the Treasury
4Partment should be granted.
6/22/65
-5Report form for nonbank financial institutions.
Governor
Robertson referred to the revised guidelines announced by the Board
on June 21, 1965, for nonbank financial institutions under the voluntary foreign credit restraint effort.
The revised guidelines
indicated that quarterly reports would be requested from nonbank
financial institutions holding $500,000 or more in foreign loans,
itIvestments, or other foreign financial assets.
Governor Robertson
recommended that the Board approve the form that had been devised
fOr such reports, which was in process of clearance with the Bureau
°f the Budget.
The report form was approved unanimously.
The meeting then adjourned.
Secretary's Note: Governor Shepardson today
approved on behalf of the Board a letter to
the Federal Reserve Bank of New York (attached
Item No. 4) approving the appointment of
Alan C. Sullivan and John G. White, Jr., as
assistant examiners.
N
I
.
Secretary )
Item No. I
6/22/65
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS
orriciAL
CORRESPONDENCE
TO THE BOARD
June 22, 1965.
Continental International Finance Corporation,
231 South LaSalle Street,
Chicago, Illinois
60690.
Centlemen:
In accordance with the request in your letter of May 28,
1965, to Mr. Leland Ross, Vice President, Federal Reserve Bank of
Chicago,
and on the basis of information available, the Board of
i yernors grants consent for your Corporation to purchase and hold
1860,000 additional shares, par value Lire 500 each, of the capital
,,teock of Banca Privata Finanziaria ("BPF"), Milan, Italy, at a cost
Lire 90,000,000 plus Italian taxes and charges, or approximately
$145,000, provided such stock is acquired within one year from the
ate of this letter.
The Board also approves the purchase and holding of shares
1411' within the terms of the above consent in excess of 15 per cent
Your Corporation's capital and surplus.
lOrn
Of
The foregoing consent is given with the understanding that
foreign loans and investments of your Corporation, combined with
of Continental Illinois National Bank and Trust Company of
"80 and Continental Bank International, including the additional
estment now being approved, will not exceed the guidelines estabet:hed under the voluntary foreign credit restraint effort now in
ect and that due consideration is being given to the priorities
4tamed therein.
the
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
Item No. 2
6/22/65
AM
TELEGR
WIRE SERVICE
Leas=
SYSTEM
BOARD OF GOVERNORS OF THE FEDERAL RESERVE
WASHINGTON
June 22, 1965.
liaalminga - San Francisco
release to
lalet June 18, 1965, requesting Board permission for
copies of documents
Superintendent of Banks of State of California of
,
contained in your Bank's files relative to Frontier Bank, Covelo
California. To the extent that documents sought constitute
'I
prior Board
unpublished information of the Board" thus requiring
approval of release to Superintendent of Banks, such approval is
copy of April 12, 1962
4"abY granted. W have advised FDIC that
that will be
letter to it from Frontier Bank is among documents.
alvan Superintendent of Banks.
(Signed) Merritt Sherman
Sherman.
.AZe
Item No. 3
6/22/65
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, O. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE SOAR°
June 22, 1965.
Dear Sir:
d that
The Board's letter of October 16, 1964, requeste
g
reportin
ntal
experime
for
each Reserve Bank and Branch arrange
of vault cash and deposits subject to Reserve requirements by a
exploring
selected sample of country banks for the purpose of
s of the
estimate
in
occur
that
laaans for reducing the differences
extend
to
was
ng
reporti
sample
veekly free reserve figures. The
°n a trial basis until June 30, 1965.
President's
With the concurrence of the Chairman of the
has
Board
the
ics,
Statist
Conference Committee on Research and
g
reportin
the
of
basis
approved the continuation on a regular
16.
October
last
of
letter
aYstem initiated pursuant to the Board's
y
necessar
the
take
will
you
if
Accordingly, it will be appreciated
Steps to assure that the reports from the sample of country banks
after June 30,
;11 Your district are continued on a weekly basis
065.
Very truly yours
Merritt Sherman,
Secretary.
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS.
Item No. 4
6/22/65
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS
orrictAL
CORRESPONDENCE
TO THE BOARD
June 22, 1965
Mr. Howard D. Crosse, Vice President,
Federal Reserve Bank of New York,
10045
New York, New York.
Dear Mr. Crosse:
In accordance with the request contained
in Mr. Bilby's letter of June 18, 1965, the Board
approves the appointments of Alan C. Sullivan and
John G. White, Jr. as assistant examiners for the
Federal Reserve Bank of New York. Please advise
the effective dates of the appointments.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
@FedFRASER