The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
Minutes for March 12, 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
X
/<y)
Gov. Szymczak
Gov. Mills
Gov. Robertson
/4
Gov. Balderston
Gov. Shepardson
x14
1
.
2
-
Minutes of the Board of Governors of the Federal Reserve System
on Thursday, March 12,
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
1959.
The Board met in the Board Room at 10:00 a.m.
Balderston, Vice Chairman
Szymczak
Mills
Robertson
Shepardson
Sherman, Secretary
Kenyon, Assistant Secretary
Riefler, Assistant to the Chairman
Thomas, Economic Adviser to the Board
Marget, Director, Division of International
Finance
Mr. Hackley, General Counsel
Mr. Noyes, Adviser, Division of Research
and Statistics
Mr. Dembitz, Research Associate, Division of
Research and Statistics
Mr. Sammons, Associate Adviser, Division of
International Finance
Mr. Solomon, Assistant General Counsel
Mr. O'Connell, Assistant General Counsel
Mr. Hostrup, Assistant Director, Division of
Examinations
Mr. Nelson, Assistant Director, Division of
Examinations
Mr. Goodman) Assistant Director, Division of
Examinations
Mr. Benner, Assistant Director, Division of
Examinations
Mr. Conkling, Assistant Director, Division of
Bank Operations
Mr. Hill, Assistant to the Secretary
Miss Hart, Assistant Counsel
Mr.
Mr.
Mr.
Mr.
Mr.
Appointment of Mr. King.
Governor Balderston stated that the
Senate Banking and Currency Committee had reported favorably to the
Senate on the nomination of Mr. G. Harold King, Jr., to be a member of
the Board of Governors.
91
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3/12/59
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.
Letter to Chase Manhattan Overseas Corporation, New
York City, consenting to the purchase by The Chase
Manhattan Bank (South Africa) Limited of shares of
a nominee company to be organized under the laws of
the Union of South Africa. (For transmittal through
the Federal Reserve Bank of New York)
1
Letter to the Union Bank and Trust Company, Grand
Rapids, Michigan, granting an extension of time
Within which to establish a branch in the vicinity
of Eastern Avenue, S. E., and Alger Street, S. E.
(For transmittal through the Federal Reserve Bank
of Chicago)
2
Letter to the Comptroller of the Currency recommending
unfavorably with regard to an application to organize
a national bank at Winnfield, Louisiana. (With a copy
to the Federal Reserve Bank of Dallas)
3
Letter to the Federal Reserve Bank of New York interPosing no objection to the foreign travel program proposed
for the current year.
4
With respect to foregoing Item No.
3, Governor Robertson commented
that the majority of those listed to serve on the board of the proposed
bank in Winnfield appeared to be satisfactory and the establishment
of an additional bank would be desirable from the standpoint of providing
eoruPetition in a one-bank community.
Although he did not feel strongly
enough to record a dissenting vote in the matter, particularly since
3/12/59
-3-
only a recommendation on the application was involved, he considered
this a very close case.
Governor Balderston indicated that he also
had reservations such as expressed by Governor Robertson.
Messrs. Marget, Sammons, and Goodman then withdrew from the
meeting.
Fidelity Bank branch application (Item No. 5).
There had been
circulated to the Board a memorandum from the Division of Examinations
dated March 3, 1959, with regard to the application of Fidelity Bank,
Los Angeles (Mar Vista), California, for permission to establish a
branch at 12255 Venice Boulevard, Los Angeles (Mar Vista), California,
simultaneously with the removal of head office operations from that
location to a location in the vicinity of Wilshire Boulevard and Beverly
Drive, Beverly Hills.
The recommendations of the Federal Reserve Bank
Of San Francisco and the Division of Examinations were favorable.
When the file was in circulation, Governor Mills attached a
memorandum indicating certain reservations.
In comments supplementing
his memorandum, he said that the Board appeared to have little choice
except to approve the application.
However, he would vote to do so
'with some reluctance because it appeared that this institution was
being used essentially as a source of funds to finance extensive mortgage
oPerations of its principal shareholders.
While these men appeared to
be competent in their field, he could not help but wonder whether their
true interest in banking was the public interest or a self-serving one,
-4-
3/12/59
colored by the broader opportunities for gain coming from real estate
financing activities.
Operations in that field tend to be vulnerable
to changes in economic conditions and, with only one examination each
year, it was difficult for the Reserve Bank to follow the bank's operations
Closely.
Mr. Nelson then commented in some detail on the nature of the
business conducted by the subject institution.
He pointed out that
most of the construction and mortgage loans originated by the bank's
owners apparently were sold to other lenders without recourse, the
applicant bank functioning for the most part in a loan servicing capacity.
The most recent report of examination showed a relatively modest amount
Of real estate loans on the bank's books, and the majority were VA and
FIlik guaranteed or insured loans.
Being somewhat apprehensive about
Potential developments, the Federal Reserve Bank of San Francisco had
obtained a commitment from the owners of the Fidelity Bank that they
would not transfer business from an affiliated mortgage company to the
bank, and the bank would be limited in extending credit to the affiliate
by the provisions of section 23A of the Federal Reserve Act.
At the conclusion of the discussion, during Which Governor
Balderston indicated he had shared some of the reservations expressed
by
Governor Mills but would favor approval of the branch application,
the letter to Fidelity Bank of which a copy is attached hereto as Item No.
'4841 aPproved unanimously, for transmittal through the Federal Reserve
laank of San Francisco.
5
3/12/59
-5At this point Mr. Molony, Special Assistant to the Board,
entered the room.
Question regarding "cash transactions" under Regulation T
(Item No. 6). The Board was in receipt of a letter from the Municipal
Finance Officers Association dated February 17, 1959, raising a question
under section 4(c) of Regulation T in connection with the purchase of
securities by public employee retirement systems or similar funds
Operated and controlled by a State or one of its subdivisions.
Because
of the infrequency of meetings of the governing boards of such systems
or funds, the Association contended that it was often impossible to
confirm a desirable purchase within the 7-day period specified in
section 4(c)(2) of Regulation T, which meant that for practical purposes
such agencies vere restricted in their purchases to securities available
in the market at or shortly before the time of meetings of the governing
board.
The Association therefore urged more liberal treatment for
agencies of the kind mentioned by amending Regulation T to permit the
creditor at his option to treat a transaction as one to be confirmed
'ithin 35 rather than 7 days.
In 1957 and again in 1958, similar questions had been raised
and the Board on those occasions took the position that the Regulation
should not be changed.
In accordance with the previous decisions, there
had been circulated to the Board a draft of letter to the Municipal
'
/
1
4*
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3/12/59
Finance Officers Association expressing the view that a change such
as requested would not be in accord with the objectives of the Regulation.
Following comments by Mr. Solomon, Governor Shepardson inquired
whether any substantial hazard would be created by some liberalization
Of the Regulation along the lines proposed by the Association.
While
he would not want to suggest undue liberalization, he felt that it might
he possible within the framework of the objectives of the statute to
mitigate some of the aggravating aspects of the Regulation.
The current
Proposal being limited in scope, he questioned whether any hazard
involved vas great enough to justify the apparent aggravation.
Governor Balderston stated he was sympathetic to Governor
Shepardsonts point of view.
Should be lengthened to
Although he was not sure that the period
35 days, the practical advantage of increasing
the 7-day period somewhat seemed to him rather clear.
It was his hope
that the Board might be willing to study possible ways of modifying the
restriction without departing from the general principle of prompt
settlement.
There followed discussion of reasons that had prompted the
Board on previous occasions not to accede to requests for liberalization
Of Regulation T along the lines now suggested, after which Governor
Shepardson alluded to the problem of enforcement and said it was his
Iltderstanding that some evasion of the pertinent provisions of the
3/12/59
-7-
Regulation might be taking place.
Mr. Solomon commented on that point
and then stated that the staff was presently studying the feasibility
of possible changes in Regulation T which would provide automatic
extensions of the time for settlement of transactions in certain
circumstances.
Thereupon, unanimous approval was given to the proposed letter
to the Municipal Finance Officers Association, a copy of which is
attached hereto as Item No. 6, with the understanding that the views
expressed by Governors Balderston and Shepardson would be reflected
in the minutes and that the staff study mentioned by Mr. Solomon would
proceed.
Study of Federal funds market.
At the meeting on November 24,
1958, a decision on the proposed collection of certain statistics on
Federal funds was postponed pending receipt of further information on
the Position of the Presidentst Conference.
At the meeting of the
Conference on December 15-16, 1958, the statistical program was approved,
vith certain qualifications.
A memorandum from Messrs. Thomas and Young
dated March 4, 1959, which had been distributed prior to this meeting,
recommended that the Board approve the collection of such statistics
sUbject to the conditions (1) that the inauguration of the program await
the publication and distribution of the initial study of Federal funds
transactions, and (2) that the authorization for the program of collection
°f statistics be for a minimum of 24 months in order to allow adequately
for seasonal movements.
-8-
3/12/59
In commenting on the study, Mr. Thomas pointed out that the
Presidents' Conference had recommended an 18-month period for the
collection of statistics.
The Board's staff, however, was recommending
a 24-month period to permit the development of a seasonal pattern, and
it might be deemed necessary to recommend an extension of the period
to
3 years at a later date. Mr. Thomas indicated that a program of
research study based on the data collected would be prepared and submitted to the Board at an appropriate time.
Thereupon, unanimous approval was given to the recommendations
contained in the memorandum from Messrs. Thomas and Young.
Mr. Dembitz then withdrew from the meeting.
Old Kent Bank suit (Item No. 7).
In connection with the suit
filed against the Board by Old Kent Bank and Trust Company, Grand Rapids,
Michigan, Mr. O'Connell recommended, in a memorandum dated March 11,
1959, which had been distributed to the Board, that Board counsel be
authorized to make available to the court, if necessary, certain unpublished
information.
It was anticipated that in considering the substantiality
Of the evidence on which the Board denied the application of Old Kent
t° operate certain branches, the court might hold the evidence shown
in the Board's reply to the suit to be insufficient to support the
Board's decision or ask Board counsel whether the Board had evidence
before it in addition to that shown in its memorandum.
Against this
111°saibility, it was suggested that (1) an "administrative file" be
3/12/59
-9-
prepared comprising, among other things, all of the material submitted
by the plaintiff in support of its application; (2) the approval of the
Comptroller of the Currency be requested for inclusion in this file of
the deposit and loan figures of the Grand Rapids branch of Michigan
National Bank, Lansing, Michigan, on certain dates; and (3) if it
should appear necessary or advisable, Board counsel be authorized to
tender the "administrative file" to the court, subject to plaintiff's
acquiescence insofar as the material previously submitted in support
of its application was concerned.
Following a summary of the matter by Mr. O'Connell, during
which he advised that the date for oral argument of the suit had been
Postponed until April 16, 1959, it was suggested that it would be
desirable to have the consent of the Michigan National Bank to the
P°ssible use of the deposit and loan figures of its Grand Rapids branch.
Accordingly, it was agreed that that bank should be notified through
the Federal Reserve Bank of Chicago in order that it might have an
oPPortunity to enter any objection.
Subject to this understanding,
Board counsel was authorized to prepare the "administrative file"
described in Mr. O'Connell's memorandum and unanimous approval was
given to a letter to the Comptroller of the Currency, attached hereto
as Item No. 70 requesting approval of the disclosure of the loan and
dePc)sit figures for the Grand Rapids branch of Michigan National Bank.
#
.
01"
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3/12/59
Messrs. Thomas, Hostrup, Nelson, Conkling, and O'Connell then
withdrew from the meeting and Mr. Brill, Chief, Capital Markets Section,
Division of Research and Statistics, entered the room.
Amendments to Regulations T and U.
discussion at the Board meeting on March
6,
In accordance with the
there had been distributed
to the Board copies of a memorandum from Mr. Solomon dated March 10,
1959, submitting for consideration material -which might be published
in the Federal Register regarding proposed amendments to Regulation T,
Extension and Maintenance of Credit by Brokers, Dealers, and Members
Of National Securities Exchanges, and Regulation U, Loans by Banks for
the Purpose of Purchasing
Securities Exchange.
or Carrying Stocks Registered on a National
This material would include descriptions of the
PUrposes of the amendments which it was hoped might aid in an understanding of them.
At this meeting, Mr. Solomon distributed copies of
a redraft of the first page of the Federal Register material intended
to clarify the Board's objective in proposing the amendments.
From consideration of the redraft, it developed to be the desire
Of the Board that such portion of any material as might be filed with
the Federal Register setting forth the objective of the proposed amendments
be
phrased in language which would correspond closely to the language
c)f the statutes and indicate
clearly that the concern of the Board
14ae with preventing excessive use of credit in the stock market.
suggestions were made in these and other respects.
Certain
928
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3/12/59
Discussion then turned to the question of procedures that would
best assure equal notice of the proposed amendments to Regulations T
and U to all interested parties.
It was noted in this connection that
material filed with the Federal Register technically becomes available
for inspection at the Federal Register Division immediately, although
it may not be published in the Register for several days.
Hence, it
appeared appropriate to issue a press statement at the Board's offices
when the material was filed.
This would enable the news of the proposed
amendments to be carried in the press, on the ticker, and through other
Public media, and at the same time copies of the Federal Register material
could be placed in the mail for those public and private agencies and
°rganizations k
to be directly concerned.
This procedure suggested to the Board that the press statement
itself need go no further than to state that the attached material was
being filed with the Federal Register, for the indication of objectives
of the proposed amendments and the descriptive material concerning them
WIlld be available in the notice of proposed rule-making.
After it had been agreed that the Board would give further
consideration to the proposed amendments to Regulations T and U this
afternoon, the members of the staff withdrew and the Board went into
executive session.
Invitation extended to Mr. Thomas.
Following the executive
session, the Secretary was informed by Governor Balderston that the
hoard, after considering a memorandum dated March 11, 1959, from Mr.
-12-
3/12/59
Thomas, Economic Adviser to the Board, authorized him to accept an
invitation to participate in the Helen Slade Memorial Conference to
be held by the New York Chapter of the American Statistical Association
on April 231 1959.
The meeting then recessed and reconvened in the Board Room at
2:30 p.m. with Governors Balderston, Szymczak, Mills, Robertson, and
Shepardson present.
From the staff Messrs. Sherman, Kenyon, Riefler,
Hackley, Molony, Noyes, Solomon, Benner, Hill, and Brill,along with
Miss Hart, were present.
Proposed meeting with labor representatives.
Governor Balderston
stated that in view of the resolution adopted recently by the Executive
Council of the American Federation of Labor and Congress of Industrial
Organizations concerning labor representation on Federal Reserve groups,
he had discussed with Chairman Martin the advisability of taking the
initiative to establish communication with that Council or its
representatives.
His first thought had been to ask Mr. Stanley H.
Ruttenberg, Director of the AFL-CIO Department of Research, whether he
saad his colleagues would like to come to the Board's offices for another
Seminar such as held a couple of years ago, and at his suggestion
Messrs. Young and Noyes talked with Mr. Ruttenberg with that idea in
lind.
However, the result of the conversation was a suggestion on
11'1% Ruttenberg's part that a group of the organization's officers might
'
3/12/59
-13-
like to meet with the members of the Board.
On March 10, 1959, this
suggestion was formalized in a letter to Chairman Martin from Mr.
George Meany, President of the AFL-CIO.
Following a comment by Mr. Noyes that Mr. Ruttenberg had
indicated that the AFL-CIO had been planning independently to see
whether arrangements could be made for a meeting of the kind described,
Governor Balderston stated that copies of Mr. Meanyls letter would be
distributed to the members of the Board.
It was then agreed that the
subject would be considered further by the Board in executive session.
Proposed amendments to Regulations T and U.
On the basis of
discussion at the morning session, Mr. Solomon distributed copies of
a redraft of introductory material proposed to be filed with the Federal
Register concerning the suggested amendments to Regulations T and U.
The Purpose of the redraft was to attempt to set forth as clearly as
Possible the general nature of the proposed amendments and the objectives
(n the Board in proposing them.
The redraft was favored by the Board, it being agreed that the
485 of such language at the beginning of any material filed with the
Pederal Register would obviate the necessity for anything more than
a perfunctory press release, to which the Federal Register material would
be attached.
The Board then gave consideration to a memorandum from Mr.
a°10mon dated March 11, 1959, which had been distributed before this
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3/12/59
meeting, presenting a further possible amendment to Regulation U that
the Board might wish to consider publishing in the Federal Register for
comments.
This amendment had been suggested by the staffs of the Board
and of the New York Reserve Bank, and Mr. Benner had ascertained that
the Philadelphia Reserve Bank staff also would favor it.
The amendment
would extend to all transactions subject to Regulation U the current
Prohibition in section 3(n) against double use of collateral when the
borrower is a broker or dealer, and would thus place Regulation U in
conformity in this respect with Regulation T.
After explanatory comments and discussion, it was tentatively
agreed to publish this item along with the other proposed amendments
to Regulation U.
With respect to the proposed amendment to Regulation T which
'Would eliminate an existing exception so that all bank loans against
registered or exempted securities arranged by brokers or dealers for
their customers would be subject to Regulation U, Mr. Solomon reported
that the New York Reserve Bank staff questioned the advisability of
Proposing such an amendment.
The reason given was that Garvin Bantel
8 Co., which does a lot of that business, might withdraw from membership
'
c)r1 the New York Stock Exchange and thereby remove itself from the supervision incident to such membership.
The Reserve Bank staff therefore
1/01al4 prefer to depend on tightening the provisions of Regulation U
rather than to amend Regulation T in the manner suggested.
P.9
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3/12/59
After discussion, it was the unanimous view of the Board that
the proposed amendment to Regulation T should be included with any
Others published in the Federal Register, with the understanding that
the matter would be reviewed again prior to adoption of such an amendment
in the light of whatever comments might be received.
Mr. Solomon next referred to the proposed amendment to Regulation
U which would require loans to certain brokers, principally finance
companies that relend stock market credit and open-end investment
companies that customarily hold stocks registered on an exchange, to
comply with the Regulation even though the loans were not secured by
any stock.
With respect to the first of these classifications of
borrowers, the proposed amendment would refer to "any loan to a person
Principally engaged in the business of making loans for the purpose
°f purchasing or carrying stocks registered on a national securities
exchange."
In this connection, Mr. Solomon said that the New York
Reserve Bank staff had suggested "to a person engaged principally,
°r as one of the person's major activities, in the business of making
loans...."
After some discussion of alternative possibilities, it was
agreed that language along the lines proposed by the New York Bank
Imuld be used if the proposed amendment were published in the Federal
Register.
-16-
3/12/59
of Regulation U
Mr. Solomon then referred to the proposed amendment
nts accepted
designed to strengthen the provisions relating to stateme
by a bank as to the purpose of a loan.
As previously agreed upon by
be
the Board, the proposed amendment would require that the statement
and that the
signed by both the borrower and an officer of the bank
facts.
officer make and retain a memorandum of supporting
The New
made
York Bank staff had suggested to Mr. Solomon that provision be
on that form
for use of a specific form and that a penalty be provided
for misstatement by the borrower.
In this connection,Mr. Solomon
statute, was
commented that Regulation U, in line with the underlying
directed toward the lender and not the borrower.
the proposed
Following discussion, it was the Board's view that
amendment should stand as drafted.
said
With further reference to the foregoing topic, Mr. Solomon
that the staff of the New York Bank would favor a provision that the
lending
statement must be signed by a borrower personally known to the
institution.
with
The reason was that the New 'York Bank did not look
favor on arranged loans, where the borrower has no contact with a
lending bank and the borrower's statement is transmitted to the bank
bY mail or other means of communication.
be unduly severe
Mr. Solomon felt it might
and also impractical to require that the borrower
3/12/59
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be known personally to the lending bank.
He hoped that a statement
such as would be required by the amendment, as drafted, would provide
the bank examiner sufficient basis to look into any questionable loan.
Agreement was expressed with the view stated by Mr. Solomon.
As to other suggestions that had been received relating to
mechanics and form, the Board indicated that it was agreeable to such
disposition of them as had been indicated by Mr. Solomon.
In response to a question, Miss Hart stated that the initial
reaction of the staff of the Securities and Exchange Commission to the
Proposed amendments was favorable but that no further comments had been
received.
It was noted that additional comments might be forthcoming
from the Commission if the proposed amendments vem published in the
Federal Register.
At the suggestion of Governor Mills, it was then agreed that
aPPropriate staff preparatory work -would continue on the basis of the
cliacuesion at this meeting and that a final decision by the Board on
Publishing the proposed amendments to Regulations T and U in the Federal
Register would be deferred until tomorrow afternoon.
It was also
agreed that the documents prepared subject to final Board decision
Should provide for comments regarding the proposed amendments to be
received not later than April
6, 1959.
):3,5
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3/12/59
The meeting then adjourned.
Secretary's Notes:
On March 11, 1959, advice was received that the
directors of the Federal Reserve Bank of San
Francisco had established, subject to the approval
of the Board of Governors, a rate of 3 per cent
(rather than 2-1/2 per cent) on discounts and
advances under sections 13 and 13a of the Federal
Reserve Act, a rate of 3-1/2 per cent on advances
under section 10(b), and a rate of 4-1/2 per cent
on advances under the last paragraph of section 13.
Other rates in the Bank's existing schedule were
established without change. Pursuant to the
authority given at the meeting on March 9, 1959,
the Secretary advised the San Francisco Bank of
approval of the rates established by its directors
effective March 12, 1959. A press statement in
the usual form was issued at 4:00 p.m. EST, all
Reserve Banks and branches were notified by
telegram, and arrangements were made for publication of a notice in the Federal Register.
Advice was received today from the Federal Reserve
Banks of Cleveland, Richmond, St. Louis, and Kansas
City that the directors of those Banks had established, subject to the approval of the Board of
Governors, a rate of 3 per cent on discounts and
advances under sections 13 and 13a along with
appropriate subsidiary rates on discounts and
advances. The Secretary advised those Banks of
approval of the rates established by their
directors effective March 13, 1959. A press
statement in the usual form was issued at 4:00 p.m.
EST, all Reserve Banks and branches were notified
by telegram, and arrangements were made for publication of a notice in the Federal Register. The
subsidiary rates established by the respective
Banks were as follows:
931
3/12/59
-19On advances under section 10 (b):
3-1/2 per cent
On advances under the last paragraph of section
13:
4 per cent for St. Louis
4 1/2 per cent for Richmond and Kansas City
The remaining rates in the existing schedules of
the respective Banks were established without
change.
Governor Shepardson today approved the following
items on behalf of the Board:
Letter to the Federal Reserve Bank of New York (attached
Item No. 8)approving the appointment of John F. Nichol as assistant
--------examiner.
Telegram to the Federal Reserve Bank of Kansas City (attached
Item No. 9) approving the appointment of Frank Prince Smith as assistant
examiner.
BOARD OF GOVERNORS
OF THE
Item No. 1
3/12/59
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
4044***
March 12, 1959.
Chase Manhattan Overseas Corporation,
18 Pine Street,
New York 15, New York.
Gentlemen:
In accordance with an application made on behalf of
Your Corporation by Mr. Alfred E. Schumacher, Vice President of
The Chase Manhattan Bank, in a letter dated February 19, 1959,
transmitted through the Federal Reserve Bank of Hew York, and
on the basis of the information furnished, the Board of Governors
grants its consent to the purchase by The Chase Manhattan Bank
(South Africa) Limited of all the shares of a nominee company to
be organized under the laws of South Africa and to be known as
"Chase Manhattan Nominees (Proprietary) Limited", in an amount
not to exceed £100.
It is understood that directors of the nominee company
will be directors of the South African bank and that signing
authority for the nominee company will be delegated only to
Persons who are officers and employees of the South African bank.
It is also understood that the company will not engage in anyactivity except that of acting as a nominee for the registration
of securities held by The Chase Manhattan Bank (South Africa)
Limited in custody for its customers or as collateral.
Please advise the Board of Governors of the Federal
Reserve System in writing, through the Federal Reserve Bank of
New York, when the nominee company has been organized and furnish
copies of the charter or articles of association or other authorizing instrument and by-laws, together with a list of the directors and officers.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
Item. No. 2
3/12/59
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
March 12, 1959.
Board of Directors,
Union Bank and Trust Company,
Grand Rapids, Michigan.
Gentlemen:
Pursuant to your request submitted through the
s of
Federal Reserve Bank of Chicago, the Board of Governor
1959,
11,
er
the Federal Reserve System extends until Septemb
esmay
Company
the time within which Union Bank and Trust
and
S.E.
tablish a branch in the vicinity of Eastern Avenue,
the
under
Alger Street, S. E., Grand Rapids, Michigan,
September 25,
authorization contained in the Board's letter of
1958.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
r-Z,0
BOARD OF GOVERNORS
eI
dolve01,4:.
OF THE
tl
Item No. 3
3/12/59
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS
orricim. CORRESPONDENCE
TO THE BOARD
March 12, 1959.
Comptroller of the Currency,
Treasury Department,
Washington 25, D. C.
Attention Mr. G. W. Garwood,
Deputy Comptroller of the Currency.
Dear
mr.
Comptroller:
Reference is made to a letter from your office dated
to organize
September 29, 1958, enclosing copies of an application
a recomting
reques
and
ana,
a national bank at Winnfield, Louisi
be
approved.
should
ation
mendation as to whether or not the applic
n of
Information contained in a report of investigatio
e
Bank
Reserv
l
Federa
the application made by an examiner for the
the
of
re
structu
l
of Dallas indicates that the proposed capita
r the
bank would be adequate. However, it is questionable whethe
to
ss
busine
proposed bank would be able to attract sufficient
the area is
assure profitable operations, since the economy of
very well
rather low and the sponsors of the institution are not
to be
appear
not
qualified to direct its affairs. There does
unfathe
of
view
In
sufficient need for the bank at this time.
ied
justif
feel
not
vorable factors, the Board of Governors does
in recommending approval of the application.
be glad to
The Board's Division of Examinations will
if you so
office
discuss this case with representatives of your
desire.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
Item No. 4
3/12/59
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
March 12, 1959.
Mr. Alfred Hayes, President,
Federal Reserve Bank of New York,
New York 45, N. Y.
Dear Mr. Hayes:
Your letter of March 2 regarding foreign travel
plans of officers and members of the staff of your Bank
during the current year has been brought to the attention
of the Board of Governors. The Board has no objections
to the plans as approved by your directors.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
BOARD OF GOVERNORS
*
44o
0
44404{1,
4
j
OF THE
0
441
Item No. 5
FEDERAL RESERVE SYSTEM
11
)
•4(r1.
3/12/59
WASHINGTON 25. D. C.
341,,4
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
March 12, 1959.
Board of Directors,
Fidelity Bank,
Los Angeles (Mar Vista), California.
Gentlemen:
Pursuant to your request submitted through the
Federal Reserve Bank of San Francisco, the Board of
Governors approves the establishment of a branch in the
bank's existing quarters at 12255 Venice Boulevard, Los
Angeles (Mar Vista), California, by Fidelity Bank, Los
Angeles (Mar Vista), California, simultaneously with
y
removal of its head office to a location in the vicinit
Hills,
of Wilshire Boulevard and Beverly Drive, Beverly
California. This approval is given provided the branch
is established within one year from the date of this letter
and that formal approval of State authorities is effective
at the time the branch is established.
It is noted plans are being formulated to augment.
capital structure by not less than I.125,000, and it is
shment
assumed this amount will be provided prior to establi
of the branch.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
f_41 9
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. O. C.
Item No.
3/12/59
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
March 12 1959.
Mr. Joseph F. Clark, Executive Director,
liunicipal Finance Officers Association,
1313 East 60th Street,
Chicago 37, Illinois.
Dear Mr. Clark:
This refers to your letter of February 17, 1959, regarding
a question raised under section 4(c) of Regulation T by the Municipal
Finance Officers Association.
According to the Association, the question arises from
or
purchases of securities by public employee retirement systems
similar funds operated and controlled by- a State or one of its subonce
divisions. Such retirement system boards customarily meet but
or perhaps twice a month. The Assocition states that practically
all dealers, upon being advised by the authorized officer of the
the
retirement system that the members of the :-;overning board of
,
offering
security
a
of
purchase
the
sYstem had informally approved
to
formal
subject
board
the
to
sale
would be willing to confirm a
infreaction at its next mectin. However, because of the relative
desirable
a
confirm
to
le
impossib
often
is
it
quency of board meetins,
For
Purchase within the 7-day period specified in section 4(c)(2).
this reason, the Association contends, such agencies are, for all
securiPractical purposes, restricted in their bond purchases to such
ties PS may be available in the market at or shortly before the particular time or date of a scheduled meeting of their governing board.
To meet this difficulty, your Association urges that the
following sentence might be added to section 4(0(5):
" ere the customer is e governmental a-ency and under the
law governing its fiscal operations, a period of more than
seven days may be required to effect 13 , nrient, the creditor
may also at his option treat the transaction as one to
which such 35-day period is applicable."
As you are aware, in an interpretation Published at p. 911
Of th-, 1957 federal neserve Bulletin the Board expressed the view that
a purchase of securities by a certain municipal employees' retirement
Lund cculd not qualify for inclusion in the special cash account where
6
BOARD
OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
lir. Joseph F. Clark
-2-
the securities were available for prompt delivery but it was known that
the retirement fund would delay payment because the supervisors who
administer the fund must approve the payment and they meet only once
or twice a month.
At the time when this interpretation was made, the Board gave
very careful consideration to the various aspects of the subject,
including the arguments now advanced by your Association. within the
Past few months, it has had occasion to reopen the matter, and once
again, to consider whether a change of the sort proposed cculd be made,
whether by interpretation or by revision of the Regulation, without
doing violence to the purpose for which Regulation T was promulgated.
The Board concluded at that tie that such a change would not be appropriate. 'While it is sympathetic with the difficulties confronted by
members of your Association, and appreciates having these problems
called to its attention, the Board continues to be of the view that
such a change would not accord with the objectives of the Regulation.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
BOARD OF GOVERNORS
OF THE
Item No. 7
FEDERAL RESERVE SYSTEM
3/12/59
WASHINGTON 25, D. C.
AOC/RCS'S OFFICIAL CORRESPONDENCE
TO THE BOARD
March 12, 1959
The Honorable R. M. Gidney,
Comptroller of the Currency,
Washington 25, D. C.
Dear Mr. Gidney:
Reference is made to the suit against the Board filed by
Old Kent Bank and Trust Company, Grand Rapids, Michigan, in the
United States District Court for the District of Columbia.
Oral argument on the Board's motion to dismiss or, in the
alternative, for summary judgment, and on the plaintiff's cross motion
for summary judgment is presently set for April 161 1959. During the
course of oral argument, it may become necessary for the Board's
counsel to make a further showing of the evidence that the Board considered in passing on the plaintiff's application than is disclosed
in the Board's memorandum in support of its motion. In addition to
the material submitted by the plaintiff in support of its application,
the Board had available comparative statements of loans and deposits
°f all banks in Grand Rapids, Michigan, as of given dates, including
he loan and deposit figures for the Grand Rapids branch of the
'P-chigan National Bank. Presumably, the latter figures were obtained
-Lrom a national bank examination report of that bank.
In anticipation of the necessity for disclosing, among other
ri
Cures, the loan and deposit figures for the Grand Rapids branch of
'
411-chigan National Bank, the Board requests approval of the Comptroller
Or such disclosure in the form and to the extent shown in the attached
rhedules. The disclosure contemplated will be made only if such action
PPears necessary to the successful defense of the Board's position.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
Ilel°sures
BOARD OF GOVERNORS
OF THE
*4'99 cop*,
tft
Item No. 8
FEDERAL RESERVE SYSTEM
3/12/59
WASHINGTON 25. D. C.
*tie
ADDRESS
44
orriciAt. CORRESPONDENCE
TO THE BOARD
#47
44
March 12, 1959.
N. R. B. Wiltse, Vice President,
Federal Reserve Bank of New York,
New York 45, New York.
Dear Mr. Wiltse:
In accordance with the request contained
in your letter of March 5, 1959, the Board approves
the appointment of John F. Nichol as an assistant
examiner for the Federal Reserve Bank of New York.
Please advise as to the date on which the appointment is made effective.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
946
AM
TELEGR
SERVICE
LEASED WIRE
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON
Item No. 9
3/12/59
March 12, 1959.
WOOLLEY — KANSAS CITY
Board approves appointment
CONFIDENTIAL (F.R.) Reurlet March 91 1959,
Federal Reserve Bank of
Frank Prince Smith as assistant examiner for
rate.
Kansas City. Advise date appointment made effective and salary
Note
Smith owes First National Bank, Ponca City, $200.
Approval
ation
given with understanding he will not participate in any examin
that bank until indebtedness liquidated.
(Signed) Kenneth A. Kenyon
KENYON
@FedFRASER