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Ameeting of the Board of Governors of the Federal Reserve SYstem was held in Washington on Thursday, March 10, 1938, at 11:30 a• m. PRESENT: Mr. Eccles, Chairman Mr. Ransom, Vice Chairman Szymczak Mr. Morrill, Secretary Mr. Bethea, Assistant Secretary Mr. Clayton, Assistant to the Chairman Consideration was given to each of the matters hereinafter referred to and the action stated with respect thereto was taken by the Board: Mr. Morrill reported that the Comptroller of the Currency to% issued a call on all national banks for reports of condition as at the close of business on March 7, 1938, and that, in accordance with the usual practice, a call was made on behalf of the Board of Governors of the Federal Reserve Systan on all State member banks for reports °f condition as of the same date. The call made on behalf of the Board was approved unanimously. Letter to Mr. Young, President of the Federal Reserve Bank of Boston, reading as follows: "This refers to your letter of January 20, 1938, in which you state that, anticipating that a loss would develop on an advance made under Section 13b of the Federal Reserve 'Act, your bank set up a reserve to cover such loss in the amount of ;2,500 at the end of 1936; that after foreclosing and realizing upon all collateral held in connection with such obligation, and applying the proceeds against the 295 3/10/38 -2- "principal of such obligation and expenses incurred therewith, there is an unpaid balance of 82,190.25; and that since it has been found that no further recoveries are possible from the obligor you ask the Board's authority to charge off the amount of the loss, 2,190.25, less the portion of the loss reimbursable by the participating bank, against the reserve, 2,500, previously set aside for such purpose. "Since the Board at the end of 1936 specifically approved setting aside a reserve of :$2,500 to cover an anticipated loss on the advance, and since reserves set aside for losses on industrial advances are considered in the nature of valuation reserves, the Board considers that the action which it took in practical effect constituted an approval of the charge-off of a loss not exceeding such reserve and you are at liberty to make the proposed chargeoff. "In order that we may be fully prepared to furnish adequate information regarding any such loss, the bank should satisfy itself that its records reflect all the facts upon which reliance is placed for justification of the reserve set up for any such loss and the charge-off thereof, not only in this but also in all other cases of advances made under Section 131) of the Federal Reserve Act." Approved unanimously, with the understanding that a copy of the letter would be sent to the Presidents of all other Federal reserve banks. Letter to Honorable William J. Douglas, Chairman of the Securities and Exchange Commission, prepared for the signature of Chairman Eccles, and reading as follows: "I have your letter of February 16 in which you ask for a list of the holding companies which headed up the banking groups included in the group banking statistics published in the February 1938 issue of the Federal Reserve Bulletin. "For convenient reference the definition of the term 'group banking' as used in the Bulletin article to which you refer, and the definition of the term 'holding company affiliate' contained in Section 2(c) of the Banking Act of 3/10/33 -3- "1933, are given in an accompanying inclosure. It will be observed that the term 'group banking' excludes holdinr company affiliations where only two banks are involved, and includes some affiliations between three or more banks in which there is no 'holding company affiliate'. In some instances the group consists of the principal or dominant bank and of some other banks controlled by the principal bank or by an associated or subsidiary holding company or similar organization. In other cases the holding company does not necessarily control the banks by way of stock ownership but apparently does control their Policies in some other manner as, for example, in association with closely allied interests. In the case of the so-called banking groups that consist entirely of banks that are not members of the Federal Reserve System, detailed information as to the character of affiliations between such banks is not available at the Board's offices. The special reports on group banking submitted to the Board of Governors by the Federal Reserve banks were based largely on reports of affiliates of member banks rendered pursuant to the provisions of the Banking Act of 1933, as amended, and on such other data with respect to affiliations between banks as came to the attention of the Reserve banks in connection with the examination of member banks or otherwise. "The names of the 52 banking groups included in the statistical analysis presented in the February issue of the Federal Reserve Bulletin are shown in the attached statement. You will observe that, in some cases, the banking group is designated simply by the name of the holding company which appears to have direct or indirect control of all of the banks in the group. In some other cases the group is designated simply by the name of the principal bank, which appears to control or dominate, directly or indirectly, the other banks in the group. In other instances the name of the principal bank is shown in conjunction with the name of the associated holding company. "It is understood that the list of banking groups is desired for use within the Commission and that it will not be released without prior reference to the Board of Governors." Approved unanimously. Letter to Mr. Sinclair, President of the Federal Reserve Bank . 297 3/10/38 -4- et Philadelphia, reading as follows: "Mr. Szymczak has brought to the attention of the other members of the Board your letter of March 5 regarding the payment of 4422.00 by the Federal Reserve Bank of Philadelphia to cover tuition fees of three of the bank's employees attending the Graduate School of Banking at Rutgers University and I have been asked to advise you that the Board will interpose no objection to this payment, With the understanding that before further expenses are incurred beyond those authorized in the Board's letters X-9829 and X-9729 the matter will be taken up with the Board of Governors." Approved unanimously. Letter to Mr. Geo. C. Brainard, Class C Director of the Federal Reserve Bank of Cleveland, reading as follows: "Vie appreciate very much your thoughtfulness in advising us as to your impression regarding the meeting in Washington on Wednesday, March 2nd, and your letter is being circulated to the members of the Board. "The remarks of Mr. Eccles were extemporaneous and he particularly asked that they be treated as 'off the record' as he was responding to the requests of several who participated in the conference to give them the benefit of his views on the current economic problems to which he had been giving attention. His talk might perhaps be characterized as in the nature of a discussion within the family. For these reasons, I regret that I am not able to send you a stenographic transcript. "May I add that we felt that the privilege of meeting with and hearing the views of the directors of the Federal Reserve Banks on the question on the program was most helpful." Approved unanimously. Thereupon the meeting adjourned. APProved: Chairman.