The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
Q A meeting of the Board of Governors of the Federal Reserve sYst Was held in Washington on Wednesday, March 1, 1939, at 11:30 a. re.. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Eccles, Chairman Ransom, Vice Chairman Szymczak McKee Davis Draper 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 hereina. rter referred to was taken by the Board: The minutes of the meeting of the Board of Governors of the Pedermi Reserve System held on February 28, 1939, were approved unani- Letter to "The Deuel County National Bank of Clear Lake", Cle Lak -e) South. Dakota, reading as follows: "This refers to the resolution adopted on November r2 19, bY the board of directors of your bank, signify1,4 the bank's desire to surrender its right to exercise liciarY Powers heretofore granted to it. ct "The Board, understanding that your bank has never he. accepted or undertaken the exercise of any trust, tlis issued a formal certificate to your bank certifying fir it is no longer authorized to exercise any of the 11(11 ,iarY powers covered by the provisions of section Of the Federal Reserve Act, as amended. This cer' 3-Cate is enclosed herewith. the f"In this connection, your attention is called to s,ct that, under the provisions of section 11(k) 3/1/39 -2- the Federal Reserve Act, as amended, when such a certificate has been issued by the Board of Governors of the Federal Reserve System to a national bank, such bank (1) shal1 no longer be subject to the provisions of section (k) of the Federal Reserve Act or the regulations of the ard of Governors of the Federal Reserve System made purlant thereto, (2) shall be entitled to have returned to _t any securities which it may have deposited with the btate or similar authorities for the protection of private °r court trusts, and (3) shall not exercise any of the 13 Zwers conferred by section 11(k) of the Federal Reserve et except with the permission of the Board of Governors of the Federal Reserve System." T Approved unanimously. Letter to 141g as Mr. Gough, Deputy Comptroller of the Currency, read- follows: ."This refers to your letter of February 1, 1939, re! al"ding the request of the National Marine Bank of Baltimore, ltimore, Maryland, for advice as to the proper method er.reporting repayments on installment loans. This question j 12es in connection with the revised form of condition :Pert and, as stated in your letter, also involves re' - 43.rt5 for the purpose of computing reserves. ti "It is understood from your letter and from informa4,1",furnished , by the Federal Reserve Bank of Richmond that i ational Marine Bank makes loans which are payable in stalIments; that when payments are received a memorandum e„,,the fact is made on a card record and the payment is 4uered in a receipt book kept by the borrower but the or°11nt of the payment is not entered or noted on the back the note; and that the bank carries on its general zedEer among its assets the total amount of these installrelit loens and, in order to show the amount of payments ze Z ! s iIred, carries among its liabilities the amount of paye received. th "Since these installments appear to be payments on th : 1._0"te which, under the contract between the bank and po rrower, immediately reduce the unpaid balance of the r 4 :r)&As 3/1/3g "loan when received by the bank, they should not be rePorted as deposits for reserve computation purposes. For Your information, in the case of a State member bank, we would take the position that installment payments of this kInc. should not be reported in item 1(c) of schedule F of the condition report but that the net amount of the -(//111s after deduction of such payments should be reported 1!1 the statement of assets and in schedule A of the condition report." Approved unanimously, together with a letter to Mr. Fletcher, Vice President of the Federal Reserve Bank of Cleveland, reading as follows: "This refers to your letter of January 28, 1939, and Previous t correspondence regarding the question whether cerQ,Elin rePayments on installment loans made by The Colonial rust Company, Pittsburgh, Pennsylvania, should be included in deposit liabilities in reports for reserve coraPlItation purposes and in call reports of condition. "We understand that the Trust Company uses several tyn ' es of notes in its personal loan department and that these notes fall into two classes for present purposes, 4earae1y, those providing for installment payments and those Providing for periodic deposits by the borrower in an account which is assigned to the Trust Company as collateral l security for the loan and which may be applied to the °an if it is not paid at maturity. 1311.1,. "AS a matter of convenience to itself, the Trust Comt , accumulates amounts paid under the class of notes iding for installment payments in an account entitled ,atallment payment fund' and makes entries extinguishing the th amount of the note and the accumulated payments from loe resPective accounts only after the full amount of the t„In has been paid. Since it appears that under the con' r act embodied in the note form the periodic installments by the bank constitute payments which, as between the ba, ! ,3 Trust Company and the borrower, reduce the unpaid clice of the loan as soon as received by the Trust Cornpa , eC these installments do not constitute deposits and Should not be included in the deposit liabilities reported the Trust Company for reserve computation purposes. Tr c.2, 3/1/39 -4- "/urthermore, in preparing condition reports, even though the installment payments are carried on the Trust Company's books in a separate account and are not endorsed on the !Iote at the time of receipt, they should not be reported 1!I it 1(c) 'Repayments on installment loans not applied directly to loans' of schedule F 'Time Deposits', but Should be deducted from the loans and discounts of the bank and only the net figure should be reported in the statement of assets and in schedule A, item 10. "The other class of notes provides for periodic deposits in an account which is assigned to the Trust Cam) ,.1132Y as collateral security for the repayment of the loan. Under the contract embodied in the note form used in ! °nnection with these loans, it appears that the amounts deposited in the assigned account do not reduce the unalci balance of the loan but instead increase the deposit ialance in the account pledf.;ed as security. As indicated , 11 the ruling published at page 538 of the September 1931 -12,,ederai Reserve Bulletin and in the Board's letter of :t'ebruery 0 1938 (S-72), these assigned deposits should be included in deposit liabilities in reports for reserve Dmputation purposes. Likewise, they should be included 11 item 1(c) of schedule F in call reports of condition." t T Letter to/tr. Parker, President of the Federal Reserve Bank or Ati ante, readily; as follows: that 7We have been informed by the,Treasury Department theit has opened a 'time deposit, open account' with Ptaton National Bank of Atlanta, Georgia, and the e, l 'at National Bank of Montgomery, Alabama. It is under: 0d that each of these is a dormant account placed with bank in order that it may be compensated for services rend 1.1, !!dered in connection with benefit payments authorized b'er the Social Security Act, and that the balance will °fl a time basis and will not be withdrawn prior to the : e, 071,7ation of thirty days' written notice from the office 4ne Secretary of the Treasury. sho "ln the circumstances, the amount of such deposits fo illd be reported as time deposits in the banks' reports l'eserve computation purposes and in their reports of lbe dition. As no provision has been made in the condition vort forms for such deposits, please request each of the 290 3/1/39 -5- "banks to show the amounts thereof against item 2 of Schedule F of the quarterly condition reports. The cap' tion of item 2 of Schedule Y should be changed to read U. S. Treasurer's time deposit, open account', if the ulalak has no postal savings deposits; otherwise the caption Should be expanded to read 'Postal savings deposits $ "S. Treasurer's time deposit, open account Ead the total of the two amounts should be extended into the right-hand column. It is understood informally that this ditionll manner of showing the new class of deposits in conreports is satisfactory to the Comptroller's office. "The Fulton National Bank, which is a weekly reporting bank, should be advised to report the new class of deposits ', E_Posits in weekly reports in the same manner as outlined : Dove for call reports. The amount thereof should be shown v ePerately in your reports to the Board. In the Board's Press statement of condition of reporting member ,Eaks the deposit will be included in 'U. S. Government ueposits,." Approved unanimously. Letter to Miss Harriet Root, Chief, United States Information ervice $ reading as follows: "In accordance with the request contained in your lette r of January 4, 1939, there is enclosed a list of cal questions concerning the Federal Reserve System vsr answers thereto, for use by your office in complying the request for information relating to the departbent wpzs and agencies of the Federal Government to be avail' sela cle at the Federal buildings at the New York World Fair the Golden Gate International Exposition." Approved unanimously. Thereupon the meeting adjourned. 41:110yed:
@FedFRASER