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Minutes for march)

To:

Members of the Board

From:

Office of the Secretary

1Q97

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
Gov. Szymczak

1/ Gov. Vardaman
Gov. Mills
Gov. Robertson
Gov. Balderston

ce,>15

Gov. Shepardson

1/ In accordance with Governor Shepardson's memorandum
of March 6, 1957, these minutes are not being sent to
Governor Vardamanfor initial.




669

Minutes of actions taken by the Board of Governors of the
Federal Reserve System on Monday, March 18, 1957.

The Board met in

the Board Room at 10:00 a.m.
PRESENT:

Mr.
Mr.
Mr.
Mr.
Mr.

Martin, Chairman
Balderston, Vice Chairman
Szymczak
Mills
Robertson
Mr. Carpenter, Secretary
Mr. Kenyon, Assistant Secretary
Mr. Riefler, Assistant to the Chairman
Mr. Thomas, Economic Adviser to the Board
Mr. Vest, General Counsel
Mr. Young, Director, Division of Research
and Statistics
Mr. Sloan, Director, Division of Examinations
Mr. Hackley, Associate General Counsel
Mr. Solomon, Assistant General Counsel
Mr. Noyes, Adviser, Division of Research and
Statistics
Mr. Masters, Associate Director, Division of
Examinations

The following items, which had been circulated to the members
Or the Board and copies of which are attached to these minutes under the
respective item numbers indicated,
were approved unanimously:
Item No.
iconlmendations in a memorandum from Mr. Marget, Director,
1
rilriaion of International Finance, regarding
Federal Reserve
TePresentation at the Fifth Meeting of Central Bank
00 14i-c1ans of the Western Hemisphere to be held in Bogota,
111.7-°*ia, June 3-15, 1957. The recommendation in the
a
;
M°randum with respect to a representation allowance was
Proved with the understanding that such
expenditures will be
A Ported to the Controller as in other recent cases where such
-g allowance
was approved.
Lettel,
tb
- to the Federal Reserve Bank of New York regarding
v 'Ign travel plans for members of its staff during the
ear 1957.




2

6I0

3/18/57

-2Item No.

Letter to the Federal Reserve Bank of New York authorizing the Bank to waive the assessment of a penalty
for deficient reserves incurred by The Bank of Huntington,
Huntington, New York.

3

Telegram to the Federal Reserve Bank of New York approving
the opening and maintenance of an account in the name of
Centrale Bank van Suriname.

4

Letter to The First National Bank of TUskaloosa, Tuscaloosa,
Alabama, approving its supplemental application for fiduciary
Powers. (For transmittal through the Federal Reserve Bank
of Atlanta.)

5

Letter to the Federal Reserve Bank of Chicago approving the
request of McHenry State Bank, McHenry, Illinois, for
Permission to carry its bank building on its books at a
figure recommended by its tax consultant.

6

Letter to the Federal Reserve Bank of Minneapolis regarding
„the status under Regulation Q of certain instruments of
ridelity State Bank, Minneapolis, Minnesota, designated
tt
capital debentures".

7

Letter to Alice Bank & Trust Company, Alice, Texas, approvtag the application for fiduciary powers filed on behalf of
Alice National Bank, into which Alice Bank & Trust Company
18 to be converted. (For transmittal through the Federal
Reserve Bank of Dallas.)

8

Letter to the Federal Reserve Bank of Dallas regarding the
;
egistration statement filed by H. Kempner, Galveston,
pursuant to the Bank Holding Company Act of 1956.
Letter to the Comptroller of the Currency requesting his
ews with respect to the application of Wisconsin Bankres Corporation, Milwaukee, Wisconsin, to acquire
84res of Southgate National Bank of Milwaukee.

9

10

n

Application to organize a national bank at Treasure Island,
The Comptroller of the Currency had requested the
recommendation of the Board with respect to an application signed




6'7'

3/18/57

-3-

by Emerson L. Parker and associates to organize a national bank

at Treasure Island, Florida. A report of field investigation made
by the Federal Reserve Bank of Atlanta indicated that the proposed
capital structure of the bank would be adevate if the investment

in fixed assets was held to a reasonable amount, but that the
Prospects for profitable operations were not very favorable, the
general character of the management could not be regarded as
satisfactory, and there did not appear to be sufficient need for the
bank in the area at this time.

Accordingly, there had been circulated

'to the members of the Board a draft of letter to the Comptroller of
the Currency which would state that the Board would not feel justified
in recommending approval of the application.
When the file was in circulation to the Board, Governor
Mills appended a note suggesting that the language of the proposed
letter, particularly with regard to the management factor, might be
t00 harsh.

At this meeting he discussed the matter in more detail,

stating that from the report of field investigation it appeared that
the Proposed directors constituted a reasonably satisfactory group
la°r a bank of small size.
Following a discussion based on Governor Mills' comments,
G°vernor Robertson suggested that the application be referred back
t0 the Federal Reserve Bank of Atlanta for further review.




He noted

3/18/57

that the community of Treasure Island, with a population
estimated at about 4,500, was without banking facilities and

that two competing applications to establish banks in the same
area had been filed.

In the circumstances, he thought it advisable

to clarify questionable factors, including the competitive position
Of existing banking institutions in nearby locations.
There was unanimous agreement with the procedure suggested

by Governor Robertson.
Proposal to amend Regulation T.

Reference was made to a

memorandum from Mr. Solomon dated March 12, 1957, copies of which had

been distributed to the members of the Board, relating to a proposal
fl'oM the New York Stock Exchange for a technical amendment to section
4(0(2) of Regulation T, which makes special provision for loans
'
lade for capital purposes to a member firm of an exchange by a
rporate affiliate of the member firm.

Since the New York Stock

Excl,
'Lange now permits corporations to be members, the proposed technical

"
Lendment would take account of that fact. It would also permit certain
"ditional types of loans between member firms or member corporations

aild their corporate affiliates. The proposal had been the subject of
illtormal discussions between the staffs of the Stock Exchange, the
ederal Reserve Bank of New York, and the Board, and Mr. Solomon's
te

morandum recommended favorably.

The memorandum suggested, therefore,

that the proposed amendment be published in the Federal Register
ror comments.




3/18/57

-5Folloying a statement by Mr. Solomon concerning the nature of

the proposed amendment, unanimous agreement was expressed with the
Procedure suggested in his memorandum.
Request for report on enrolled bill H.J. Res. 209.

This

bill, now awaiting the President's signature, would "provide interim
assistance, through the Federal National Mortgage Association, in
relieving the shortage of funds for home loans".
$50 million of notes owed

It would convert

by the Association to the Treasury into

Preferred stock, and therefore would have the effect of increasing
the Association's total borrowing power by $500 million.
slso increase from

It would

1 billion to $1,350,000,000 the amount which

the Association may borrow from the Treasury, and the authority of the
Association to enter into advance commitments on cooperative housing

Pl'oJects would be increased from a total of $50 million to a
total of $100 million.
The principal features of the bill, namely, those relating to
the

conversion of borrowings from the Treasury into preferred stock
the increase in authority to borrow from the Treasury, were the

611biect of a letter from the Board to the Budget Bureau dated
tecember 21, 1956, although the amounts involved at that time were
-411-ce the size of those in the present bill.

Since the principles

kl3P3.ieable to both bills appeared to be similar, Mr.

Solomon's

41e1llorandum suggested that, if the Board wished to reiterate its position,




3/18/57

-6-

letter could be sent to the Budget Bureau attaching a copy
Of the earlier letter and stating that the Board's views continued
to be the same.
In response to a question regarding the need for submitting
a report on the enrolled bill, in view of the Board's previous letter,
Chairman Martin said he believed that the President liked to have the
views of the various interested agencies on file when he was
considering proposed legislation.

In the circumstances, he saw no

objection to following the procedure suggested in Mr. Solomon's
memorandum.
Accordingly, unanimous approval was given to a letter to the
BUreau of the Budget in the form attached to these minutes as
Item No

11
Testimony on mortgage credit.

Reference was made to testimony

to be given
by Chairman Martin tomorrow before the Subcommittee on
Rousing of the Senate Banking and Currency Committee and it was
stated that a draft of such testimony had been completed by the
st ff and would be available for distribution to the Board later
in the
day.
Chairman Martin inquired whether the proposed testimony would

be substantially different from the statement made by Mr. Riefler
recently before the House Subcommittee on Housing, and Mr. Riefler
re
Plied that there had been some rearrangement of the material and

that some additional data were included.




675

3/18/57

_7...
Chairman Martin then suggested that the draft testimony be

distributed to the members of the Board as soon as available, with
the understanding that if any member of the

Board wished to have

the statement discussed at a meeting of the Board, he could do so,
but that otherwise the testimony would be presented as drafted.
There was unanimous agreement with the procedure suggested
by

Chairman Martin and it was understood that unless some member of

the Board desired to have a meeting called on the matter, the
testimony would be presented in a final form satisfactory to
Chairman Martin.
The meeting then adjourned.
Secretary's Note: Pursuant to
recommendations contained in memoranda from appropriate individuals
concerned, Governor Balderston,
acting as alternate to Governor
Shepardson, today approved on
behalf of the Board increases in the
basic annual salaries of the following persons, effective on the
dates indicated:
Ma 1
re1121-957:
Nam

Basic annual salary
Division

Office of the Secretary
EdYthe J. Bascom, Records Clerk
Loretta D. Beale, Senior Records Clerk
Examinations
C. y
41. Griffin, Supervisory Review Examiner
J. ,
I
ank Holahan, Supervisory Review Examiner
e!ter A. Walter, Assistant Federal Reserve
)(11-miner




From

$3,500

4,345
11,180
11,180

4,930

To

$3,585
4,480
11,395
11,395
5,065

1;71;

3/18/57

-8-

all!Ey increases (continued)
Basic annual salary
Name and title

Division

From

To

Administrative Services

$6115
Harry E. Kern Supervisor,
Procurement Section
4,795
Donald B. Fitzhugh, Tabulating Planner
Ruth E. Ellis, Cafeteria Helper (half-time basis) 1,488

$6,250
4,930
1,525

11 1957:
Jean Crosby, Secretary




Legal

4,755

1+,930

677
Item No. 1
3/18/57
To:

Board of Governors

From:

Arthur W. Marget

March 8, 1957
Subject: Meeting in Bogota,
Colombia, and travel connected
therewith

1. On August 10, 1956, Messrs. Thomas and Young and I
submitted to the Board a memorandum (a copy is appended hereto)
On the
composition of the Federal Reserve delegation to the Fifth
Meeting of Central Bank Technicians of the Western Hemisphere in
Bogota, Colombia, June
1957. In a memorandum dated September 4, 1956, Governor Shepardson, acting
on behalf of the Board,
concurred in principle with the proposals embodied in the memoandum of August 10, 1956, and stated his understanding that
ftnal recommendations for individuals to comprise the delegation
14111 be submitted in the spring." My final recommendations, which
are concurred in by Messrs. Thomas and Young, are as follows:
a.

I would act as head of the delegation.

b. The "two additional members of the Board's
staff" would be Mr. Robert L. Sammons, Chief of the Latin
American Section of the Board's Division of International
Finance, and Mr. Donald C. Miller, Chief of the Government Finance Section of the Board's Division of Research
and Statistics. As stated in the memorandum of August,10,
1956, Mr. Sammons would act as secretary of the delegation.
c. As indicated in Mr. Hayes's letter to the
Board, dated March 4, 1957, the members from the Federal
Reserve Bank of New York would be Messrs. Peter P. Lang
and George Garvy, "and another member of the Research Department."
d. In accordance with the memorandum of August 10, 1956, Mr. George Mitchell, Vice President of the
Federal Reserve Bank of Chicago, has been invited to be a
member of the delegation, and has accepted.
2. In accordance with the foregoing, travel and per diem
allowance for the trip to Bogota and attendance at the sessions
ther
et e is hereby requested for the three members of the Board's
mjff who will be in attendance: namely, Messrs. Sammons and
th-Ller, and myself. In addition, the Board's attention is invited .to
142 fact that, in connection with previous meetings of the Central
alio Technicians, the Board has authorized a representation
"not to exceed $500," with the understanding that "the



f'r-4Q
4.)

Board of Governors

-2-

March 8, 1957

furnishing of receipts for expenditures under this authorization will
not be required," although "such expenditures are to be reported to
the Board's Personnel Committee." It is of course for the Board to
decide whether a similar action should be taken in the present instance. I myself would recommend it.

3. For various reasons, visits by members of the Board's
Division of International Finance to the central banks of Latin American countries have been much lest7; frequent and extensive than those,
say, of the staff of the Federal Reserve Bank of New York. The fact
that Mr. Sammons and I shall be going as far as Bogota, in connection
With the meetings there, would suggest that an effort be made to extend
this trip sufficiently to include visits to the central banks of the
countries neighboring Colombia. Specifically, I would recommend that
the Board approve additional travel and per diem allowance sufficient
to cover
the following:
a. To permit Mr. Sammons, after the conclusion of the
meetings in Bogota, to proceed to Quito (Ecuador) and Lima (Peru
and to spend approximately one week at each of the two central
banks, for the purpose of seeing at close range just how Latin
American central banks are organized and operated.
b. To permit me, in advance of the Bogota meetings, to
visit the central banks in the following three countries: Bolivia
(La Paz), Peru (Lima), and Ecuador (QuitOTT—Tte purpose of my
visit would differ from that of Mr. Sammons's visit in that I
should be chiefly concerned with the currency stabilization operations which are being undertaken in all three countries, with the
central bank playing a major role in each case. (Bolivia is in
the midst of a heroic effort to stop a disastrous hyper-inflation
that had reduced the boliviano to a free market rate of over
11,000 to one U. S. dollar; Peru, in contrast, has been holding
its currency stable under a program involving standby arrangements
with the International Monetary Fund, the U. S. Treasury, and U. S.
commercial banks; Ecuador is about to receive a mission, whose
organization was instigated by the International Bank, to study
and make recommendations on its general financial position.) I
believe that, by proper adjustment of the length of my stay in
Bogota, I could accomplish the trip within a total of approximately
three weeks (apart from the time required for air travel), including attendance of at least one week of the meetings in Bogota.




679

Board of Governors

-

March

8, 1957

My request therefore entails authorization for approximately
one week's stay beyond the two weeks I should otherwise have
devoted to the Bogota meetings, and the extra travel expense
beyond Bogota, to La Paz, Lima, and Quito. The proposed
difference in the timing of Mr. Sammons's visits and my
own visits to Quito and Lima would have the further advantage
that, apart from a one-week overlap in Bogota, the two
of us would not be away from the Board at the same time.

(Signed) AWM
Attachment




6S0

Item No. 2
3/18/57

March 18, 1957

Mr. Alfred Hayes, President,
Federal Reserve Bank of New Yo
New York 45, N. Y.
Dear Mr. Hayes:
Your letter of March 4, 1957 regarding foreign
travel plans for members of your staff during the current
Year has been brought to the attention of the Board of
Governors. With the possible exception of attendance of
Mr. Sedwitz at the session of the Center for Latin American
Monetary Studies, the Board has no objection to the plans
15,8 approved by your directors.
As indicated in Chairman Martin's letter of FebrtlarY 26, 1957, the Board would prefer to defer any commitment with respect to student attendance at the Center until
4 Procedure for participation by Federal Reserve System
Personnel can be determined.




Very truly yours,
(Signed) S. R. Carpenter
S. R. Carpenter,
Secretary.

Item No. 3

3/18/57

March 18, 1957

Mr.

J. P. Jensen,
Manager, Accounting Department
Pederal Reserve Bank of New York,
New York 45, New York.
Dear Mr. Jensen:
This refers to your letter of March 8, regarding the
Penalty of $559.32 incurred by The Bank of Huntington, Huntington,
Nev York, on a deficiency of 8.7 per cent in its required reserves
for the semimonthly period ended February 15, 1957.
It is noted that the deficiency resulted from the fact
that, through inadvertence, a transfer draft for $300,000 was made
PaYable to and deposited in the Chemical Corn Exchange Bank, instead
"the Federal Reserve Bank of New York; the subject bank's auditor
!-nd his assistant, who had the responsibility of maintaining the
yank's reserve account, were absent from the bank for about ten days
!nd the error was not discovered; and this is the bank's first
'
&eficiency since it became a member in 1941.
In the circumstances, the Board authorizes your Bank to waive

the assessment of the penalty in this case.




Very truly yours,
(Signed)

Merritt Sherman

Merritt Sherman,
Assistant Secretary.

682

Item No. 4

3/18/57

March 18, 1957

SANFORD - NEW YORK

Your wire March 7.

Board approves the opening

and maintenance of an account on your books in the name
Of the Centrale Bank van Suriname, subject to the usual
terms and conditions upon which your Bank maintains
"counts for foreign central banks and governments.
It is understood that you will in due course
"ter participation in this account to other Federal
Reserve

Banks.




(Signed) S. R. Carpenter
CARPEN1ER

683

Item No. 5

3/18/57

March 18, 1957

Board of Directors,
The First National Bank of Tuskaloosa,
Tuscaloosa, Alabama.
Gentlemen:
The Board of Governors of the Federal Reserve
SYstem has given consideration to your supplemental application
for fiduciary powers, and, in addition to the authority heretofore
granted to act as trustee, executor, administrator, registrar
Of stocks and bonds, guardian of estates, assignee, receiver, and
c°mmittee of estates of lunatics, grants you authority to act, when
not in contravention of State or local law, in any other fiduciary
capacity in which State banks, trust companies, or other
corPorations which come into competition with national banks are
Pe rmitted to act under the laws of the State of Alabama. The
exercise of all such powers shall be subject to the provisions of
the Federal Reserve Act and the regulations of the Board of Gcvernors
Of the Federal Reserve System.
A formal certificate indicating the fiduciary powers
/4hich The First National Bank of Tuskaloosa is now authorized to
eXercise will be forwarded to you in due course.




Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Assistant Secretary.

684

Item No. 6

3/18/57

March 18, 1957

Mr. W. R. Diercks, Vice President,
Federal Reserve Bank of Chicago,
Chicago 90, Illinois.
Dear Mr. Diereks:
Reference is made to your letter of March 5, 1957,
submitting the request of the McHenry State Bank, McHenry,
Illinois, for permission to carry its bank building on its
books at a figure of 3185,493.61.
On June 22, 1954, the Board of Governors approved

the investment in bank premises by the McHenry State Bank
°Is an amount not to exceed $250,000, provided such bank
Premises are carried as an asset upon the books of
bank at a figure not to exceed $150,000. The bank's tax
consultant, after an analysis of the bank's expenditures,
41.1as recommended that the bank premises be carried at
'P185,493.61. This does not represent an increase in the
Proposed cost of the building but gives effect to the
&mount properly chargeable to expense at the present time.
In view of the circumstances, the Board of
vernors interposes no objections to the bank's proposal
t° carry the bank premises at a figure not to exceed $185,493.61.

Go




Very truly yours,
(Signed)

Merritt Sherman

Merritt Sherman,
Assistant Secretary.

Item No.

7

3/18/57
March 18, 1957

Mr. H. G. McConnell, Vice President,
Federal Reserve Bank of Minneapolis,
Minhespolis 2, Minnesota.
Dear Mr. McConnell:
ConsideraVon has been given to the question raised in
Your letter of January 28, 1957, and earlier letters concerning
tne status under Regulation Q of certain instruments of Fidelity
State Bank, Minneapolis, Minnesota, designateu "Capital Debentures" bearing 4 per cent interest.
On the basis of the Board's understanding of all the
information that has been submitted, it is the Board's view that
the funds received by the bank and evidenced by the instruments
question should be regarded as "deposits" for the purposes of
egulation Q and also Regulation D. In arriving at this view,
,
che Board has noted that the instruments apparently are issued
in the regular course of business at the request of any customer
and in any amount desired by the customer in much the same way as
°rdinary deposit instruments are issued. While the instruments
rve been altered to state that payment of the funds evidenced
ereby will be "subject to the approval of the Conunissioner of
,,nks", they nevertheless provide for payment "on demand"; and
'
0
1 is understood that, as a practical matter, the customer will
ain his money on demand because the bank proposes to have an
illate buy the debmtures when they are presented for payment.

t

In these -A.rcumstances, the fact that the instruments
rec.:
4.-te that they "shall be subordinate and subject to the claims
depositors and may be subordinate and subject to the claims
Other creditors", is not sufficient, in the Board's judgment,
to
alter their essential characteristics as deposit instruments.
07
rerdingly, since the instruments do not conform to the definitions
'savings deposit" or "time deposit" in Regulation Q, the funds
need by the instruments must be regarded as "demand deposits".
ese views seem to accord with those of counsel to your Bank.




Very truly yours,
(Signed)

Merritt Sherman

Merritt Sherman,
Assistant Secretary.

Item No. 8

3/18/57
March 18, 1957

Board of Directors,
Alice Bank & Trust Company,
Alice, Texas.
Gentlemen:
The Board of Governors of the Federal Reserve System has
given consideration to the application for permission to exercise
fiduciary powers made by you on behalf of the Alice National Bank,
Texas, the national bank into which the Alice Bank & Trust
2mloiany, Alice, Texas, is to be converted, and grants such national
oank authority, effective if and when it is authorized by the
ComPtroller of the Currency to commence business, to act, when not
in contravention of State or local law, as trustee, executor, adrninistrator, registrar of stocks and bonds, guardian of estates,
assignee, receiver, committee of estates of lunatics, or in any
Other fiduciary capacity in which State banks, trust companies,
°r other corporations which come into competition with national
are permitted to act under the laws of the State of Texas.
Tne exercise of all such rights shall be subject to the provisions
the Federal Reserve Act and the regulations of the Board of
*overnors of the Federal Reserve System.
'
After the conversion of the Alice Bank & Trust Company
t0 the Alice National Bank becomes effective and the Comptroller
°f the Currency authorizes the national bank to commence business,
iY°11 are requested to have the board of directors of the national
ank adopt a resolution ratifying your application for permission
t° exercise fiduciary powers, and a certified copy of the resolu01°n 80 adopted should be forwarded to the Federal Reserve Bank
.
c Dallas for transmittal to the Board for its records. When a
'
c°PY of such resolution has been received by the Board, a formal
ertificate covering the national bank's authority to exercise
,
'rtaet powers will be forwarded.

Z




Very truly yours,
(Signed)

Merritt Sherman

Merritt Sherman,
Assistant Secretary.

Item No. 9

3/18/57
March 18, 1957

Mr. L. G. Pondrom, Vice President,
Federal Reserve Bank of Dallas,
Dallas, Texas.
Dear Mr. Pondrom:
This refers to your letter to Mr. Sloan of January 25,
1957, transmitting along with other enclosures a registration
statement filed by H. Kempner, Galveston, Texas, pursuant to the
Bank Holding Company Act of 1956.
It is understood that H. Kempner, a business trust, filed
it6 registration statement on January 22, 1957, notwithstanding
that it was required under section 5(a) of the Act and section 3
°f Regulation Y to register with the Board not later than January 15,
1957. In this connection, section 8 of the Bank Holding Company Act
Prescribes penalties for any company ". . . which willfully violates
'IV. provision of this Act, or any regulation or order issued by the
Board pursuant thereto . .
." In considering whether or not to
Port this matter pursuant to the Board's letter of December 4,
(FRS 49310), it is appropriate for your Bank to request from
he Registrant a statement in explanation of the delinquent filing.
on the basis of such a statement and all the facts and circum!
tances you may deem it necessary to investigate, your Bank should
uetemine that the Act and regulation were not "willfully" violated,
then it would be the view of the Board that it would be within the
a ercise of sound discretion for your Bank not to report this matter.

f56

As indicated in your letter and in Mr. Rudy's memorandum,
appears that H. Kempner falls within the definition of a holding
7
1 )114Pany affiliate as that term is defined in section 2(c)(1) of the
tanking Act of 1933, as amended, and that it has voted the stock of
blq° national banks without obtaining a voting permit as required
i3r section 5144 of the Revised Statutes and the Board's Regulation P.
t is assumed that your Bank will pursue this matter with H. Kempner,
(*1
13
a
ting out the need for complying with the voting permit requirement,
that you will call attention to the provisions of section 2 of
iagulation P with respect to organizations not engaged as a business
41 holding stock of, or managing or controlling, banks.




Very truly yours,
(Signed) S. R. Carpenter
S. R. Carpenter,
Secretary.

Item No. 10
3/18/57

March 18, 1957

18I_NESSENGER
The Honorable,
The Comptroller of the Currency,
Washington 25, D. C.
MY dear Mr. Comptroller:
In accordance with the provisions of section 3(b) of
the Bank Holding Company Act of 1956, you are advised that
Wisconsin Bankshares Corporation, Milwaukee, Wisconsin, a bank
holding company, has made application to this Board for prior
sPProval by the Board of the acquisition of 2,950 shares of the
ipital stock of Southgate National Bank of Milwaukee, Milwaukee,
wlsconsin. There is enclosed for your information a copy of the
application.
It will be appreciated if you will advise the Board
it writing of your views and recommendations with respect to
this application.
The date of receipt of this letter by your office
"oust be made a part of the Board's records with respect to the
application, Therefore, it will be appreciated if the enclosed
°PY of the letter is signed and returned with the date of receiPt indicated thereon.




Very truly yours,
(Signed) S. R. Carpenter
S. R. Carpenter,
Secretary.

689

Item No. 11.
3/18/57
March 18, 1957

Mr. Roger W. Jones,
Assistant Director for Legislative Reference,
Bureau of the Budget,
Washington 25, D. C.
Lear Mr. Jones:
This refers to your memorandum of March 15, 1957 requesting
a report on the enrolled bill H. J. Res. 209, "To provide interim
assistance, through the Federal National Mortgage Association, in
relieving the shortage of funds for home loans, and for other purPoses.”
The bill would convert $50 million of notes that Federal
National Mortgage Association owes to the Treasury into preferred
stock. Since FNMA can borrow ten times the amount of its stock,
this would have the effect of increasing FNMA's total borrowing
P°14er by $500 million. The bill would also increase the amount
ich FNMA may borrow from the Treasury from the present maximum of
qa billion to $1,350,000,000.

n

The authority of FNMA to enter into advance commitments on
:
°oPerative housing projects would be increased from a total of
(c50 million, with not more than $5 million for any one State, to
. total of $100 million with not more
than $10 million for any one
tate. The authority of HHFA to increase the size of rehabilitation
tri°rtgage that may be insured in high cost areas would be broadened.

Z

The principal features of the bill are those relating to
conversion of $50 million of FNMA borrowings from the TrePrairy
preferred stock and the increase in the authority of FNMA to
2rrow from the Treasury. These were the subject of a report which
Board made to the Bureau of the Budget on a similar proposal on
rcember 21, 1956. The amounts there involved were twice the size
1,
'
1h those in the present bill. The
present bill also omits a feature
a)?ich was in the bill commented on in December, namely, a provision
b 1°14ing FNMA to treat dividends which it pays to the Treasury as
'ng the same as interest for purposes of income taxes. However,
e e general principles applicable to the December bill and the presrlt bill would seem to be similar.
the

4




Mr. Roger W. Jones

-2-

For convenient reference there is attached a copy of the
Board's letter of December 21, 1956, mentioned above, and the
Board's views with respect to the main features of the present Bill
continue to be as indicated in that letter.
Very truly yours,
(Signed) S. R. Carpenter
S. R. Carpenter,
Secretary.
Attachment.