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460 A meeting of the Board of Governors of the Federal Reserve 6)retem — was held in Washington on Wednesday, March 14, 1945, at 10:30 PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Eccles, Chairman Ransom., Vice Chairman Szymczak McKee Draper Evans Mr. Morrill, Secretary Mr. Carpenter, Assistant Secretary Mr. Thurston, Assistant to the Chairman The action stated with respect to each of the matters herein44er l'eferred to was taken by the Board: The minutes of the meeting of the Board of Governors of the Reserve System held on March 13, 1945, were approved unani— k144. Memorandum dated March 13, 1945, from Mr. Bethea, Director the ' 4.11s1on of Administrative Services, submitting the resigna— tio4 of Albert R. Price as a laborer in that Division, effective as ot the close of business on March 12, 1945, and recommending that the re 81gaation be accepted as of that date, with the understanding that 41*'°Priate deduction will be made from his salary for overdrawn ekatea. lea,e of 4 hours and 30 minutes. The resignation was accepted as rec— ommended. ot Letter to Mr. Hill, Vice President of the Federal Reserve Bank adelPhia, reading as follows: 461 3/14/45 -2- "In accordance with the request contained in your letter of March 9, 1945, the Board approves the of Mrs. Rose De Mucci, Miss Mary F. Leonetti and ' ,t1-ss 1 Audrey J. Supancic as special assistant examiners Ior the Federal Reserve Bank of Philadelphia." Approved unanimously. Letter to Mr. Stewart, Vice President of the Federal Reserve St. Louis, reading as follows: February 27, 1945, "Reference is made to your letter of requesting the Board's approval of a supplemental to the retirement System in the case of Adolph taYrclent 1: Sehleyer. t. "Due to the exceptional circumstances in this parcase the Board wil3 offer no objection to the ' 1) DaY1ent of an amount which will increase Mr. Schleyer's ! 1,1 nsion on a cash refund basis to equal the pension he receive were he age 65, reduced by 2-1/2 per cent .L or f each year he lacks of being age 65, the formula set °rth in the Board's letter dated March 17, 1944 (8-741).11 Approved unanimously. Letter to Mr. Young, President of the Federal Reserve Bank of ktea g°3 reading as follows: "This refers to Mr. Diercks' letter of February 19, 1945 11 , with regard to the application of 'The Ladoga State cirlki, Ladoga, Indiana, for permission to exercise fidu7 powers. an "In view of the information submitted, and in accordWith Mr. Diercks' recommendation, the Board of Gover1: of the Federal Reserve System grants the applicant Permission, under the provisions of its condition of , ershiP numbered 1, to act as trustee, executor, adman1.8t : ' e tor and guardian of estates. The Board's approval in,glven subject to acceptance by the bank of the followad:,standard conditions prescribed in connection with the ovrers:on to membership of State banks exercising fiduciary 4 Y& 3/14/45 - Hi Such bank shall not invest funds held by it as fiduciary in stock or obligations of, or property acquired from, the bank or its directors, officers, or employees, or their interests, or in stock or Obligations of, or property acquired from, affiliates of the bank. "2. Such bank, except as permitted in the case of national banks exercising fiduciary powers, shall not invest collectively funds held by the bank as fiduciary and shall keep the securities and investments of each trust separate from those of all other trusts and separate also from the properties of the bank itself. "3. If funds held by such bank as fiduciary are deposited in its commercial or savings department or otherwise used in the conduct of its business, it sha,11 deposit With its trust department security in the same manner and to the same extent as is required of national banks exercising fiduciary powers. 'Since it is understood that in the State of Indiana st funds deposited in the banking department of a bank I" preferred claims in event of liquidation of the bank, ,QU are authorized, in accordance with the general authorion previously granted by the Board, to waive complii'e with condition of membership numbered 3 herein until lirther notice. Lad "You are requested to advise The Ladoga State Bank, , a °gay Indiana, of the Board's action, and to obtain an 1:12°Priate resolution of the board of directors of the ' ce accepting the conditions listed above and forward a fied copy thereof to the Board." Approved unanimously. It was reported that in accordance with the procedure agreed Pc)ri at the meeting of the Board on March 13, 1945, Samuel Morgan, as l'aid'ezt, of the Safeway Finance Plan, Inc., and the Local Finance CornOtt& St. Louis had executed the voluntary agreement to close their from March 19 to March 23, inclusive, and that the form of 3/14/45 -4- to be issued by the Board suspending the licenses of the two regis trants had been agreed upon by telephone with the Federal Ree e Bank of St. Louis and was ready for issuance by the Board. Thereupon, the issuance of the following order was approved by unanimous vote: "THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON, DISTRICT OF COLUMBIA Regulation W - In Relation to Sat eway Finance Plan, Incorporated Missouri St. Louis T 4..0 • . ecll Finance Company Missouri St. Louis ORDER SUSPENDING LICENSE Inc "Samuel Morgan, President of the Safeway Finance Plan, *, and the Local Finance Company, St. Louis, Missouri, ing appeared in connection with alleged violations of segulation W of the Board of Governors of the Federal Rewerie System (hereinafter called the 'Board'), and having aa!;ved notice and opportunity for hearing before the Board 8111L1 Consented to the issuance of this Order for the suspen1(3n of their licenses, and having agreed that: 1. Safeway Finance Plan, Inc., and the Local Finance Company were at all times mentioned herein and now are engaged in the business of extending loan credit through the various offices which are operated under the following trade names in the following places: 'eway Finance Plan, Inc. Missouri 5899 Easton Avenue St. Louis c"waY Finance Plan, Inc. Missouri sex 3500 North Grand St. Louis ewaY Finance Plan, Inc. Loc 3626 Washington Avenue Missouri St. Louis al n Fi ance Company Loc 5899 Easton Avenue Missouri St. Louis 41 Finance Company Loc 3500 North Grand Missouri St. Louis al Finance Company 3626 Washington Avenue Missouri St. Louis 2. Safeway Finance Plan, Inc., and the Local Finance Company duly filed the Registration Statements required by the Board's RegulationW and were at all times mentioned herein r 3/4/45 -5- "and now are subject to such Regulation; 3. Safeway Finance Plan, Inc., and the Local Finance Company pursued a course of dealing in contravention of Regulationli and negligently failed to comply with same. Such negligent violations include (a) Statements of Borrower incomplete; not obtained; inaccurate, (b) Statements of Necessity incomplete; improperly used, (c) maximum credit value of listed articles exceeded in the making of loans, the proceeds of which were used to purchase such listed articles, (d) granting of longer terms than permissible on instalment Obligations, (e) violations of Section 11(a), 11(b), and 11(c). "The said Samuel Morgan, President of the Safeway ',,inance Plan, Inc., and the Local Finance Company, having 4t.urther agreed that during the period of suspension of the licenses of the Safeway Finance Plan, Inc., and the °cal Finance Company,under this Order, he will close all c c)i the aforesaid offices and discontinue all business exePt that of receiving payments on existing loans; that ' t,IP?r1 resumption of business following the termination of suspension period, he will conform the business of c e Safeway Finance Plan, Inc., and the Local Finance illpany, to the requirements of the Regulation; and that 1;ie.companies will not in any manner in their future soltations for business indicate or imply that they will grant terms which would be in contravention of the Regulation r_ "Accordingly, the Board having considered the consent, ' d Presentations, and agreements of the party named, and unaer authority of section 5(b) of the Act of October 6, 1917, : 8 l atnended, and the Executive Order of the President No. 43, hereby orders: 1. That the licenses of the said Safeway Finance Plan, Inc., and the Local Finance Company,issued pursuant to the Board's Regulation Wbe and the same are hereby suspended for the period commencing at the close of business March 17, 1945, and ending at the opening of business March 24, 1945, unless said period is sooner terminated by the Board: Provided, j C t';` 3/1V45 -6- "that this Order, during the suspension period, shall not prohibit (a) the carrying on of regular office and accounting work, (b) the receipt of any payments through the mails or through the normal and usual collection facilities, and (c) the making of payments of any obligations, including obligations to employees for salaries or wages. 2. Any terms used in this Order that are defined in Regulation VI shall have the meaning therein given them. "By order of the Board of Governors of the Federal ihserve System this 14th day of March, 1945. ‘0EAL) (Signed) Chester Morrill Secretary sat. "I, the undersigned, Samuel Morgan, President of the evlay Finance Plan, Inc., and the Local Finance Company u.0 hereby confirm the agreements and representations set °tit in the aforesaid order and consent to its issuance." (Signed) Samuel Morgan" In connection with the above action, approval was also given to the following telegram to Dale M. Lewis, Manager, Consumer Credit Department, Federal Reserve Bank of St. Louis: te "Order being issued by Board today in form which you lePhoned us suspending from March 19 to March 23 inclusive p. enses of Safeway Finance Plan, Incorporated, and Local ance Company. Press statement in form enclosed with , 11r letter of March 7 will be given out about 10 o'clock tomorrow morning for immediate release. You are at i'Derty to give press statement such local publicity as °11 deem desirable. Copy of press statement being wired m Presidents of all other Federal Reserve Banks with stateto tr that they are at liberty to give it such publicity in r eir districts as appears to them to be desirable. Please ward to Board for its files original order, agreement press statement on which Samuel Morgan has endorsed --Le consent." Z The press statement referred to in the telegram was in the following form: 466 3/14/45 —7- "The Board of Governors of the Federal Reserve System has suspended from March 19, 1945, to Ma ch 23, 1945, both dates inclusive, the licenses under the Board's RegW, of the Safeway Finance Plan, Incorporated and the Local Finance Company, located at 5899 Easton Avenue, aad their branches at 3500 North Grand and 3626 Washington, St, Louis, Missouri. "The Board, acting under authority of Section 5(b) of the Act of October 6, 1917, and the President's Execu,Q.ve Order No. 8843, ordered the suspension of the licenses . because of failure to comply with the provisions of Regution 11, with respect to loan credits. All of the terms ! of the order were agreed to by the registrants, who have 1ren their assurance that they will hereafter comply with of the provisions of the Regulation. "The violations included two of a general nature: (1) Statements of Borrower incomplete; not obtained; I/Accurate. tise(2) Statements of Necessity incomplete; improperly 5 "Specific violations included: it 4 (3) Maximum credit value of listed articles exceeded .he making of loans, the proceeds of which were used to PUrchase such listed articles. (4) Granting of longer terms than permissible on instalment obligations. (5) Violations of Section 11(a), 11(b) and 11(c). d "Under the order, the several offices will be closed the period of suspension, except for the purpose of accepting payments on existing obligations. The offices are to be posted to this effect. The terms of the order not prevent payment of obligations owed by the Safeway i!nance Plan, Incorporated, and the Local Finance Company, 4410luding salaries and wages to employees." Attorne Ilemorandum dated March 7, 1945, from Mr. Dreibelbis, General Y, or itober submitting a letter dated February 28, 1945, from the firm tson, Leachman, Payne, Gardere & Lancaster with which was ensed• their statement for $8,000 on account of legal services ren- INI01 111 connection with the Transamerica Corporation matter, cover- e Period from June 1, 1944, to March 1, 1945, and for $366.09 467 34446 -8N. itemized expenses, and recommending, in accordance with the proeekr, aPProved by the Board on August 3 and September 1, 1943, that the PaYment of the bill be approved. Approved unanimously. Letter to Mr. Joseph J. O'Connell, General Counsel, Treasury tePartlitent, reading as follows: 0 "There is enclosed herewith a letter dated March ' 7 1945, addressed to you by Mr. Logan, Vice President d General Counsel of the Federal Reserve Bank of New together with its enclosure, regarding the issuance y the Department of State of certifications under sec10a 25(b) of the Federal Reserve Act which relate to ' 12roperty which might be received in an account after the ' 4te such certifications are issued. "The Board of Governors joins in the request that the °atter be presented by the Treasury Department to the Detment of State, as indicated in the enclosed letter. may advise the Department of State that the Legal Divi: °4 of the Board of Governors concurs in the opinion exin the memorandum of law prepared by Counsel of e Federal Reserve Bank of Nem-York which is enclosed ile rewith." r Approved unanimously. Thereupon the meeting adjourned. Yficdu Secretary. Chairman.
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