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609
Minutes for
To:
Members of the Board
From:
Office of the Secretary
March 25, 1966
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, please initial
below. If you were present at the meeting, your
initials will indicate approval of the minutes. If
you were not present, your initials will indicate
only that you have seen the minutes.
Chm. Marti,ty
Gov. Robertson
Gov. Shepardson
Gov. Mitchell
Gov. Daane
Gov. Maisel
Gov. Brimmer
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Federal Reserve Bank of St. Louis
Minutes of the Board of Governors of the Federal Reserve
System on Friday, March 25, 1966.
The Board met in the Board
Room at 10:00 a.m.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
Martin, Chairman
Robertson, Vice Chairman
Shepardson
Maisel
Brimmer
Mr. Sherman, Secretary
Mr. Kenyon, Assistant Secretary
Mr. Young, Senior Adviser to the Board and
Director, Division of International Finance
Mr. Holland, Adviser to the Board
Mr. Solomon, Adviser to the Board
Mr. Molony, Assistant to the Board
Mr. Hackley, General Counsel
Mr. Solomon, Director, Division of Examinations
Miss Eaton, General Assistant, Office of the
Secretary
Mr. Morgan, Staff Assistant, Board Members'
Offices
Messrs. Brill, Koch, Partee, Axilrod, Gramley,
Eckert, Ettin, and Keir, and Mrs. Peskin
of the Division of Research and Statistics
Messrs. Sammons, Hersey, Reynolds, Baker, and
Gemmill of the Division of International
Finance
Money market review.
Mrs. Peskin commented on the Government
securities market, after which Mr. Eckert reported on the ABA National
Savings Conference he had attended recently in Chicago, commenting
Particularly on developments with regard to the use of savings certificates.
Mr. Gemmill then reported on foreign exchange market conditions
and related matters.
Tables were distributed affording perspective on
the money market, bank reserve utilization, and the capital market, and
°I1 direct Federal agency debt.
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-2Rates on certificates of deposit.
Mr. Brill reported a conver-
sation with Mr. Duesenberry of the Council of Economic Advisers, who
expressed concern about the development of a savings rate war on the
West Coast, particularly in view of the action of the Home Loan Bank
Board yesterday in permitting savings and loan associations to raise
their rates to 5 per cent on certificates above a certain size with a
six-month maturity.
Apparently, Mr. Brill said, Mr. Duesenberry's com-
ments reflected growing concern within the Council about the consequences
of a rate war; he had asked whether the Board would re-examine the possibility of establishing a special rate ceiling on member bank savings
certificates below a certain size.
question to the Board.
Mr. Brill had agreed to present the
He pointed out, however, that his own attitude
toward the proposal was unsympathetic.
He doubted whether the problem
was amenable to this kind of solution.
Governor Maisel commented that the Council should document the
Problem it felt existed.
The Board should not be asked to take action
On an unclear problem.
Mr. Solomon (Adviser) said he understood one point of concern
was that savings interest rates, if ratcheted upward by the force of
competition, would not tend to come down again at a time when lower rates
were desirable.
The strength of this argument was debatable.
In a review of the legal situation, Mr. Hackley pointed out that
the statute requires the Board to fix different maximum rates on
time
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and savings deposits according to one or more of four criteria specified
in the statute itself.
Because of the language of the law, the Legal
Division had always taken the position, and the Board itself had gone
on record, that the Board could not fix different maximum rates according to any other criteria.
There was, however, another approach con-
sidered last fall, namely, that the Board under its authority to define
demand, time, and savings deposits might amend Regulation Q to define
time deposits as including deposits only above a certain amount.
The
Legal Division felt that such a definition might be legally questionable.
The statute did not set up any criteria for the definition of demand,
time, and savings deposits, but obviously the law contemplated that the
d efinitions would be reasonable ones.
If the Board based its definition
of time deposit on the amount of the deposit, it would be saying that a
deposit of less than a certain amount could not be a time deposit and
Would, therefore, have to be considered a savings deposit.
And unless
savings deposits were expanded to include deposits of business organizations, then a deposit by such an organization below the stated amount,
even though it had a specific maturity, would have to be a demand deposit.
It seemed to the Legal Division that this would be quite unreasonable.
If the Board wished to run the risk of legal attack, it would seem desirable not
only to amend the time deposit definition to exclude deposits
Of less than a specified amount but at the same time to redefine savings
deposits so as to permit a business corporation to have a savings deposit
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UP to a certain amount.
The Legal Division felt, however, that either
approach would be contrary to the intent of the statute.
The question of the definition of a savings deposit had been
considered by the Board, Mr. Hackley recalled, in connection with a
proposed revision of Regulation Q, Payment of Interest on Deposits.
The New York Reserve Bank had recommended that the definition be expanded
to permit business corporations to maintain savings deposits up to a
S pecified maximum amount.
However, the Board reached the conclusion
that it would not want to open up savings deposits to business corporations.
The Comptroller of the Currency had, of course, stated that the
Board had exceeded its authority in excluding savings deposits by business concerns and had indicated that he would not object to national
hanks receiving such deposits.
Nevertheless, the practice apparently
had not become widespread among national banks.
Question was raised about the possibility of limiting time
dePosits to business corporations, and Mr. Hackley pointed out that
there could be objections to that sort of definition on the ground that
Lt was not
reasonably based.
The basis for limiting savings deposits
to individuals and nonprofit organizations was that such deposits had
traditionally been used for thrift purposes.
To say that a time deposit
might not be held by an individual could be vulnerable, he believed, to
a charge that the Board had exceeded its statutory authority.
On a further question regarding the New York Reserve Bank's
recommendation, Mr. Hackley recalled that, as he had indicated previously,
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it was considered in connection with a proposed general revision of
Regulation Q.
The Board had never acted on the proposed revision, but
he thought there was general agreement at the time against following
the New York Bank's suggestion.
In a further comment, Mr. Hackley added that any treatment of
time deposits of the kind suggested by Mr. Duesenberry could subject
the Board to criticism for discriminating against small depositors.
•
Chairman Martin noted that the question apparently arose because
of the action taken by the Home Loan Bank Board.
The Board of Governors
should keep the problem under review, but he thought the danger was
Potential rather than actual.
It was then agreed that Mr. Brill would tell Mr. Duesenberry
that the Board had considered the matter this morning, that the Board
had not disposed of it, and that the Board would like to have the specific problem documented if it was felt that any action should be taken.
At this point members of the research staff not concerned with
the other items on the agenda withdrew from the meeting and the followlhg entered the room:
Mr. Cardon, Legislative Counsel
Mr. Johnson, Director, Division of Personnel Administration
Mr. Hexter, Associate General Counsel
Messrs. O'Connell, Shay, and Hooff, Assistant General Counsel
Messrs. Leavitt and Thompson, Assistant Directors, Division
of Examinations
Messrs. Forrestal, Heyde, Plotkin, Shuter, and Smith, and
Mrs. Heller of the Legal Division
Messrs. Burton, Egertson, and Poundstone of the Division of
Examinations
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-6Discount rates.
The establishment without change by the Federal
Reserve Banks of Philadelphia, Richmond, Cleveland, Chicago, St. Louis,
Kansas City, and Dallas on March 24, 1966, of the rates on discounts and
advances in their existing schedules was approved unanimously, with the
understanding that appropriate advice would be sent to those Banks.
Approved items.
The following items, copies of which are
attached to these minutes under the respective item numbers indicated,
were approved unanimously after consideration of background material
that had been made available to the Board and clarification of points
of information about which members of the Board inquired:
Item No.
Letter to Citizens Fidelity Bank and Trust Company,
Louisville, Kentucky, approving the establishment
of a branch in Valley Station.
1
Letter to Marine Midland International Corporation,
New York, New York, consenting to its exercising
rights to shares of Credico, Inc., Montreal, Canada.
2
Letter to Ann Arbor Bank, Ann Arbor, Michigan,approvlng the establishment of an in-town branch.
3
Letter to United California Bank, Los Angeles,
California, approving the establishment of a branch
in San Ramon Village.
4
Letter to United California Bank, Los Angeles,
California, approving the establishment of a branch
at Sunset Boulevard and Spaulding Avenue, in place
of an existing branch at 7550 Sunset Boulevard.
5
Letter to the Federal Reserve Bank of New York approv111g an amendment to the fiscal agency agreement between
hat Bank and the Inter-American Development Bank.
6
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Federal Reserve Bank of St. Louis
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-7Item No.
Letter to the Chairman of the Senate Banking and
Currency Committee reporting on S. 2986, a bill
to extend the Defense Production Act of 1950, as
amended, and for other purposes.
7
Letter to The Bank of Virginia, Richmond, Virginia,
regarding the differential in the rate of interest
a member bank must exact on loans to a depositor
upon the security of his time deposit.
8
Letter to the Federal Reserve Bank of New York with
regard to whether a member bank may make a loan to
the wife of a depositor, secured by the husband's
time deposit and for his benefit, without requiring
interest on the loan to be at least 2 per cent more
then the rate of interest paid on the time deposit.
(It was understood that a copy of the letter would
be sent to Chairman
Randall of the Federal Deposit
Insurance Corporation, with an appropriat covering
e
letter, in view of the response made by a staff member of the Corporation to such an inquiry.)
9
Letter to the Federal Reserve Bank of Atlanta approvlng the payment of salaries to Richard A. Sanders as
Vice President and Harry C. Schiering as Assistant
General Auditor at the annual rates fixed by the
Board of Directors.
10
Letter to the Federal Reserve Bank of New York inter,
)
.I °sing no objection to a leave of absence without pay
-uor Assistant Vice President Fousek.
11
utter to the Federal Reserve Bank of Cleveland concernlng the services of Messrs. Morrison and Landis as cons
ultants.
12
Letter to the National Bank of Detroit, Detroit, Michigan,
regarding a proposed amendment to Regulation D, Reserves
Member Banks, to permit deduction from gross time
'
c
leposits,
in computing required reserves, of balances
Nue from other banks. (With similar advice to First
iyational Bank and Trust Company of Kalamazoo,
"alamazoo, Michigan.)
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Federal Reserve Bank of St. Louis
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-8Reports on competitive factors.
After discussion, reports on the
competitive factors involved in the following proposed mergers or similar transactions were approved unanimously for transmittal, the conclusions being stated as follows:
To the Comptroller of the Currency regarding the
Proposed merger of Vina Banking Company, Vina,
Alabama, into City National Bank of Russellville,
Russellville Alabama
The proposed merger of Vina Banking Company into City National
Bank of Russellville would not have adverse competitive effects.
To the Comptroller of the Currency regarding the
Proposed merger of Clinton National Bank and Trust
Company, St. Johns, St. Johns, Michigan, and
Fowler State Bank Fowler Michi an
Without regard to the banking factors and the convenience and
needs of the communities to be served, it appears that the effect
of the proposed merger of Clinton National Bank and Trust Company,
St. Johns, St. Johns, Michigan, and Fowler State Bank, Fowler,
1chigan, is adverse to the extent that existing competition
between the two institutions will be eliminated.
TO the Federal
Deposit Insurance Corporation regarding the proposed purchase of assets and assumption
of liabilities of Northern California National Bank
°f San Mateo, San Mateo, California, by California
Canadian Bank San Francisco California
The proposed purchase of assets and assumption of liabilities of
N°rthern California National Bank of San Mateo by California Canadian
I3ank, San Francisco, would not have adverse competitive effects.
With reference to the Michigan case, the staff had submitted a
draft conclusion which included a statement that the effect of the
Proposed merger would not be substantially to lessen competition, or
tO tend
to create a monopoly, or in any other manner to restrain trade.
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The purpose was to accommodate the Board's competitive factor reports
to the standards on which proposed mergers were to be judged under the
new bank merger legislation.
Discussion developed a consensus that the
suggested language was not the best way of remodeling the reports.
It
was decided not to include such language in the Michigan report, but it
w aS agreed that the staff should continue to work on a revised format.
Several suggestions were offered by members of the Board.
Eligibility of demand paper for discount and as security for
.21.11aEtE_.(Items 14 and 151.
There had been distributed a memorandum
from the Legal Division dated March 18, 1966, on the eligibility of a
new series of Commodity Credit Corporation certificates of interest as
security for advances under the eighth paragraph of section 13 of the
Federal Reserve Act.
The memorandum pointed out there would be no dif-
ficulty in reaching a finding of eligibility except for the fact that
some of the loans of which the certificates would represent an interest
were in the form of demand notes.
This would necessitate reversal of a
ruling of the Board in 1917, which held that demand notes were ineligible
for discount.
It was the recently-stated opinion of the Federal Reserve Bank
of New York's legal staff, in which the Board's Legal Division concurred,
that the 1917 ruling was legally incorrect and that the Board would be
justified in holding that demand paper was eligible for discount provided it satisfied the other requirements of the statute and the Board's
Re gulation A, Advances and Discounts by Federal Reserve Banks.
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Federal Reserve Bank of St. Louis
Since
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the CCC certificates of interest otherwise satisfied the eligibility
requirements, such a ruling by the Board would render those obligations
eligible as security for advances.
It was the Legal Division's recommendation that the Board reverse
the 1917 ruling notwithstanding an amendment to the Federal Reserve Act
in 1923, apparently enacted because of the 1917 ruling, which provided
that only a limited category of bills of exchange payable at sight or
on demand would be eligible for discount.
It was recommended that an
interpretation declaring demand paper eligible for discount be published
in the Federal Register and the Federal Reserve Bulletin.
Remarks by members of the staff included comments on the legal
Points involved and comments to the effect that reversal of the 1917
ruling would be harmonious with the objectives of the current study of
the discount mechanism.
Unanimous approval then was given to a letter to the Comwodity
Credit Corporation (copy attached as Item No. 14).
Unanimous approval
also was given to the issuance of an interpretation with respect to the
demand paper question.
A copy of the interpretation, in the form sub-
sequently transmitted to the Federal Register for publication, is attached
as Item No. 15.
Violation of proxy solicitation rules (Items 16 and 17).
had
There
been distributed a memorandum from the Legal Division dated March 18,
1966, regarding a violation of proxy solicitation rules by The Elyria
Savings & Trust Company, Elyria, Ohio.
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Federal Reserve Bank of St. Louis
Effective June 28, 1965, Elyria
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Savings & Trust registered its capital stock pursuant to section 12(g)
of the Securities Exchange Act of 1934 and the Board's Regulation F,
Securities of Member State Banks, and became subject to other reporting
Provisions of Regulation F, including the requirements governing the
Solicitation of proxies.
Effective March 1, 1966, Elyria converted from
a State bank to a national bank, after obtaining a vote of approval by
its stockholders at a meeting held February 2, 1966, in connection with
Which proxies were solicited by management and, presumably, obtained
and voted.
No attempt evidently had been made to comply with the pro-
visions of Regulation F in the preparation of the proxy material.
Mr. Plotkin, in reviewing the matter, pointed out there was no
question in the staff's opinion but that a violation of law had occurred.
It was recommended that the Board send the bank a letter notifying it
of the violation and suggesting ratification by its stockholders of the
earlier action, and also that the Board send a letter to the Comptroller
of the Currency enclosing a copy of its letter to Elyria.
An alterna-
tive procedure would be to petition the U.S. District Court for an order
d eclaring invalid the proxies obtained by the bank in connection with
the stockholders' meeting.
However, since this was the first year that
the proxy solicitation rules were in effect and since it appeared that
the bank's violation was inadvertent, it was not believed that such
action was warranted.
In reply to questions, members of the staff expressed the view
that it was highly unlikely that the result of the stockholders' meeting
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would have been different had the proxy solicitation rules been observed.
They also pointed out that the question of what further steps, if any,
Should be taken if the bank did not correct the violation would be a
matter for determination in the discretion of the administering agency
(the Board).
The point was made by a member of the Board that if the
step was taken of calling the violation to the attention of the bank,
and if the bank did not respond, the Board should be prepared to take
Whatever further action then seemed appropriate.
After further discussion, unanimous approval was given to a
letter to Elyria Savings & Trust Company in the form attached to these
minutes as Item No. 16, and to a letter to the Comptroller of the Currency as attached to these minutes as Item No. 17.
Application of Security New York State Corporation (Items 18
.P.1111_12).
On February 14, 1966, the Board approved the application of
Securit—
y New York State Corporation, Rochester, New York, to become a
bank holding company through acquisition of up to 100 per cent of the
outstanding voting shares of Security Trust Company of Rochester,
Rochester, New York, and The State Bank of Seneca Falls, N.Y., Seneca
Falls, New York.
The issuance of the order and statement was deferred at the
meeting on March 21 pending the availability of a revised draft statement reflecting several suggestions made at that time.
Discussion of
the revised draft at this meeting related principally to the question
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whether to include in the statement several paragraphs concerning a
letter dated February 18, 1966, in which the Comptroller of the Currency expressed opposition to two other New York bank holding company
applications on which the decisions had not yet been announced by the
Board.
Although the Comptroller had not referred to the Security appli-
cation in his letter, the basis of his opposition to the other applications was attributable to circumstances similar to those involved in
the Security case.
Therefore, Mr. O'Connell recommended that a refuta-
tion of the Comptroller's argument be set forth in the Security statement, and it was agreed that this should be done.
As to the Security
order, it was agreed that it should contain a notation that Governor
Brimmer did not participate in the action.
The issuance of the order and statement then was authorized;
copies of the documents, as issued, are attached as Items 18 and 19.
Request of Central Bank of the Philippines.
A request had been
received under date of March 9, 1966, from the Governor of the Central
Bank of the Philippines for assignment of an expert from the Federal
Reserve System to help set up the mechanics and techniques of trading
in government securities and to advise on procedures, techniques,
Policies, and strategy of open market operations.
After some discussion, it was lgreed to solicit the views of
the Federal Reserve Bank of New York on possibilities for complying with
the request.
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-14Suggested amendments to Bank Holding Company Act.
A draft of
letter to Chairman Robertson of the Senate Banking and Currency Committee concerning certain amendments to section 3 of the Bank Holding
Company Act suggested by Senator Douglas at a Subcommittee hearing on
March 16 had been distributed.
As analyzed in the proposed letter, the effect of the suggested
amendments would be to forbid a merger involving a holding company subsidiary bank located in a State other than the holding company's home
State.
The view would be expressed that such a prohibition might be
unnecessarily severe, but the letter would state that the Board favored
changes in the law to require Board approval (exclusively) of any mergers involving holding company subsidiary banks.
A draft of amendment
to the Bank Merger Act would be transmitted.
Mr. Cardon pointed out that the draft letter attempted to make
clear for the record the Board's position, which was not made clear at
the Subcommittee hearing.
Mr. Hackley then reviewed certain suggestions on the proposed
letter that Governor Robertson had discussed with him.
As to mergers
Of subsidiary banks outside the home State, the thought was to indicate
that in such cases the merger would be scrutinized more severely than
a merger of a subsidiary bank located in the home State.
Mr. Hackley
was not sure how that suggestion could best be implemented; perhaps by
a statement in the Committee report.
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Federal Reserve Bank of St. Louis
The other suggestion was that the
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objective of making all mergers of holding company subsidiary banks
Subject to Board approval might be accomplished by amendment of the
Bank Holding Company Act rather than the Bank Merger Act.
An alterna-
tive would be to refrain from specifying how the objective could best
be accomplished, leaving that for the Committee and its staff to decide.
There followed discussion of the complexity of amendments to
the Bank Holding Company Act that might be required, and Governor
Robertson suggested that the matter be presented in as palatable a way
as possible, perhaps through offering alternative possibilities for
c onsideration.
At the conclusion of the discussion, it was understood that a
revised draft letter would be prepared for the Board's consideration.
The meeting continued from this point with limited staff
a
ttendance.
Foreign travel.
The Board authorized travel by John E. Reynolds,
Adviser, Division of International Finance, to Paris to attend a meetin
g of Working Party 2 of the Organization for Economic Cooperation and
Development to be held March 28-30, 1966, with per diem at rates prescribed by the Standardized Government Travel Regulations.
Latin American assignment.
An inquiry had been received, on
behalf of the Organization of Central American States, concerning the
av ailability of Vice President Vergari of the Federal Reserve Bank of
Ph iladelphia to attend a seminar to be held in San Salvador April 1823, 1966, on the use of computers by Central American central banks
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for statistical purposes.
It having been ascertained that Mr. Vergari
would not be available, the Board agreed to suggest the name of David
Staiger of the Division of Data Processing.
The meeting then adjourned.
Secretary's Notes: On March 23, 1966,
a letter was sent to First National City
Bank, New York, New York, extending to
October 1, 1966, the time for establishment of a branch in Antwerp, Belgium. (A.
letter of March 12, 1965, had acknowledged
receipt of the bank's notice of intent to
establish this branch.)
On March 22, 1966, Governor Shepardson
approved on behalf of the Board the
following items:
Letter to the Federal Reserve Bank of Richmond (attached Item No. 20)
a pproving the appointment of L. Rex Dazey as assistant examiner.
Memoranda recommending the following actions relating to the Board's
staff:
Salary increases
J. William Via, Jr., Senior Attorney, Legal Division, from $11,723
to $12,510 per annum, effective March 27, 1966.
Linda S. Blumberg, Progranuiter (Trainee), Division of Research and
S tatistics, from $5,352 to $5,702 per annum, with a change in title to
Oigital Computer Programmer, effective March 27, 1966.
Clayton B. Stinson, Assistant Head Messenger, Division of Administrative Services, from $3,943 to $4,289 per annum, effective April 24,
1966.
On March 23, 1966, Governor Shepardson
approved on behalf of the Board memoranda recommending the following actions
relating to the Board's staff:
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Salary increase
Constance J. Comella, Stenographer, Division of Administrative
Services, from $4,641 to $5,181 per annum, with a change in title to
Secretary, effective April 24, 1966.
Transfer
Levon H. Garabedian, from the position of Administrative Assistant,
Division of International Finance, to the position of Chief, Division
Administration Section, Division of Research and Statistics, with an
increase in basic annual salary from $9,267 to $10,619, effective upon
assuming his new duties.
On March 24, 1966, Governor Shepardson
approved on behalf of the Board the
following items:
Letter to the Federal Reserve Bank of Philadelphia (attached
Item No. 21) approving the appointment of James C. Kogel as assistant
examiner.
Letter to the Presidents of all Federal Reserve Banks (attached
Item No. 22) transmitting forms to be used by State member banks and
their affiliates in submitting reports of condition as of the next
call date.
Memorandum from the Division of Research and Statistics dated
March 18, 1966, recommending that two additional economist positions
be established in the National Income, Labor Force, and Trade Section.
It was understood that the positions vacated by the persons transferred
into the newly established positions would be abolished.
Memorandum from the Division of Research and Statistics dated
March 18, 1966, recommending that a "visiting professor" position be
es tablished in the National Income, Labor Force, and Trade Section.
Memoranda recommending the following actions relating to the
Board's staff:
Ap_221111
.mall!
.
Reginald Haynes as Messenger, Division of Administrative Services,
with basic annual salary at the rate of $3,507, effective the date of
entrance upon duty.
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A
ointments
-18(continued)
Stanley B. Kay as Summer Law Clerk, Legal Division, with basic
annual salary at the rate of $5,181, effective the date of entrance
Upon duty.
Walter Jordan, Jr., Cook-Trainee, Division of Administrative
Services, from $4,569 to $4,953 per annum, with a change in title
to Cook, effective April 24, 1966.
Ae_ptance of resignation
Carl S. Hackney, Messenger, Division of Administrative Services,
effective at the close of business April 6, 1966.
Governor Shepardson today approved on
behalf of the Board memoranda recommending the following actions relating
to the Board's staff:
Sal
--_aEy
increases, effective March 271 1966
Name and title
Division
Basic annual salary
From
To
Office of the Secretary
IlarY L. Scott, Senior Indexing and Reference
Assistant
Petronella van der Vossen, Stenographer
$ 6,086
$ 6,278
4,641
4,797
4,641
4,797
4,953
6,476
18,825
10,619
5,352
6,683
19,415
10,987
15,188
15,696
Legal
Jacqueline L. Gilmore, Stenographer
Research and Statistics
Julia G. Back, Library Assistant
,1!len D. Cunney, Research Assistant
41eanor S. Frase, Senior Economist
Patric H. Hendershott, Economist
1
International Finance
Helen B. Junz, Economist
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increases
effective March 27
Name and title
1966
(continued)
Division
Basic annual salary
From
To
Examinations
M. Patricia McShane, Assistant Review Examiner
Irwin W. Robinson, Senior Federal Reserve
Examiner (change in title from Federal
Reserve Examiner)
$ 8,961
11,723
$ 9,267
12,510
5,221
6,053
12,945
3,626
5,491
6,365
13,380
3,745
Mack Richardson Rowe, Chief, Economic Graphics
4,953
10,987
5,352
11,723
Section
Russell H. Tharp, Programmer
Theodore
A. Veenstra, Jr., Chief, Financial
Statistics Section
7,479
15,188
7,733
15,696
Administrative Services
Quincy W. Barnes, Operator (Xerox-Mimeograph)
Aaron Dortch, Foreman-Operator
John D. Smith, Assistant to the Director
Marie Willard, Cafeteria Helper
Data Processing
Dorothy L. Folsom, Draftsman
Transfer
Ramona K. Harlow-Rao, from the position of Key Punch Supervisor
in the Division of Data Processing to the position of Statistical Clerk
in the Division of Research and Statistics, with no change in basic
annual salary at the rate of $4,953, effective March 28, 1966.
4
.tPtance of resignation
,.
Harlow D. C. Osborne, Chief, Consumer Credit and Finances Section,
ulvision of Research and Statistics, effective at the close of business
APril 1, 1966.
There was sent today to Mr. Antonio Fuste
of Hyattsville, Maryland, a letter confirming arrangements for him to conduct a course
in Conversational Spanish for members of the
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
10f)0
3/25/66
-20Board's staff, as an activity of the Board's
Employee Training and Development Program,
at a fee of $7 for each session conducted.
(The agreement with Mr. Fuste was in lieu of
a previous agreement with English Language
Services, Inc., to provide a similar course.)
Seer
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Federal Reserve Bank of St. Louis
1 0(
Item No. 1
3/25/66
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS
OFFICIAL
CORRESPONDENCE
TO THE BOARD
March 25, 1966
Board of Directors,
Citizens Fidelity Bank and Trust Company,
Louisville, Kentucky.
Gentlemen:
The Board of Governors of the Federal Reserve
System approves the establishment by Citizens Fidelity
Bank and Trust Company, Louisville, Kentucky, of a branch
at 10111 Dixie Highway, Valley Station (unincorporated
area), Jefferson County, Kentucky, provided the branch is
established within one year from the date of this letter.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
(The letter to the Reserve Bank stated that the
Board also had approved a six-month extension
of the period allowed to establish the branch;
and that if an extension should be requested,
the procedure prescribed in the Board's letter
of November 9, 1962 (S-1846), should be followed.)
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Federal Reserve Bank of St. Louis
1002
Item No. 2
3/25/66
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
March 25, 1966.
Marine Midland
International Corporation,
120 Broadway,
New York, New York. 10005
Gentlemen:
In response to your letter of February 8, 1966, the Board
of Governors grants consent for Marine Midland International Corporation ("IC") to exercise convertibility rights to acquire Class
"A" shares of Credico, Inc. ("Credico"), Montreal, Canada, to which
MMIC has become entitled as holder of convertible subordinated
debentures Series "B" of Credico, to the extent that MMIC's total
investment in shares of Credico is in excess of US$200,000.
Please advise the Board of Governors as provided in
Section 211.8(d) of Regulation K of any share acquisitions made
under the above consent.
The foregoing consent is given with the understanding
that the investment now being approved, combined with other foreign
loans and investments of your Corporation, will not cause the total
of such loans and investments to exceed the guidelines established
under the voluntary foreign credit restraint effort now in effect
and that due consideration is being given to the priorities contained therein.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
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Federal Reserve Bank of St. Louis
1003
Item No. 3
3/25/66
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
March 25, 1966
Board of Directors,
Ann Arbor Bank,
Ann Arbor, Michigan.
Gentlemen:
The Board of Governors of the Federal Reserve
System approves the establishment by Ann Arbor Bank,
Ann Arbor, Michigan, of a branch at the northwest corner
,
of the intersection of North Ashley and West Huron Streets
shed
establi
Ann Arbor, Michigan, provided the branch is
within six months from the date of this letter.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
(The letter to the Reserve Bank stated that the
Board also had approved a six-month extension
of the period allowed to establish the branch;
and that if an extension should be requested,
the procedure prescribed in the Board's letter
of November 9, 1962 (S-1846), should be followed.)
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Federal Reserve Bank of St. Louis
1004
BOARD OF GOVERNORS
Item No. 4
3/25/66
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
March 25, 1966
Board of Directors,
United California Bank,
Los Angeles, California.
Gentlemen:
The Board of Governors of the Federal Reserve
System approves the establishment by United California
Bank, Los Angeles, California, of a branch in the vicinity of the intersection of Alcosta Boulevard and Village
Parkway, San Ramon Village, Contra Costa County,
California, provided the branch is established within
one year from the date of this letter.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
(The letter to the Reserve Bank stated that the
Board also had approved a six-month extension
of the period allowed to establish the branch;
and that if an extension should be requested,
the procedure prescribed in the Board's letter
of November 9, 1962 (S-1846), should be followed.)
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Federal Reserve Bank of St. Louis
1005
Item No. 5
3/25/66
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS
orrictAL
CORRESPONDENCE
TO THE BOARD
March 25, 1966
Board of Directors,
United California Bank,
Los Angeles, California.
Gentlemen:
The Board of Governors of the Federal Reserve
System approves the establishment of a branch by United
California Bank, Los Angeles, California, at the intersection of Sunset Boulevard and Spaulding Avenue, Los
Angeles, California, provided such branch is established
within one year from the date of this letter and provided
operations at the bank's existing office at 7550 Sunset
Boulevard are discontinued simultaneously with the opening
of the new office.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
(The letter to the Reserve Bank stated that the Board also
had approved a six-month extension of the period allowed to
establish the branch; and that if an extension should be
requested, the procedure prescribed in the Board's letter
of November 9, 1962 (S-1846), should be followed.)
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Federal Reserve Bank of St. Louis
(;(
BOARD OF GOVERNORS
Item No. 6
3/25/66
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
March 28, 1966.
Mr. H. A. Bilby, Vice President,
Federal Reserve Bank of New York,
New York, New York.
10045
Dear Mr. Bilby:
This refers to your letter of March 17, 1966, and enclosures,
concerning the proposed issuance by the Inter-American Development Bank
of Short- Term Dollar Bonds, First Issue, in the aggregate principal
amount of $60 million, consisting of One-Year Bonds, due April 15, 1967;
1w
Bonds, due April 15, 1968; and Five-Year Bonds, due April 15,
71.
1971. You advise of the Inter-American Development Bank's proposal to
aPPoint the Federal Reserve Bank of New York its Fiscal Agent through
amendment of Schedule A of the Fiscal Agency Agreement, dated September 7,
962, between Inter-American Development Bank and your Bank, and request
,
Lhe Board's approval of your Bank's acting in the proposed capacity.
The Board of Governors approves of your Bank acting as Fiscal
Ag
in respect to the proposed issue by the Inter-American Development
Bank of Short-Term Dollar Bonds, First Issue, and approves the execution
nd delivery by your Bank or an Agreement witfi the Inter-American
uavelopment Bank, substantially in the form of the draft enclosed in
ur March 17 letter of Supplement No. 3 to the Fiscal Agency Agreement,
ted September 7, 1962, between your Bank and Inter-American Development
Bank.
r
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
••• •
:
..•,00V C04.4
BOARD OF GOVERNORS
•
Item No. 7
3/25/66
OF THE
:fa
•0
FEDERAL RESERVE SYSTEM
w.
.71
•. •,
WASHINC3TON
(.1*
cc.
.•
OFFICE OF THE CHAIRMAN
March 29, 1966
The Honorable A. Willis Robertson,
Chairman,
Committee on Banking and Currency,
United States Senate,
Washington, D. C. 20510
Dear Mr. Chairman:
This is in response to your request of March 3, 1966,
for the Board's views with respect to the bill, S. 2986, "To
and for
extend the Defense Production Act of 1950, as amended,
other purposes."
The only provisions of the Act which directly concern
the responsibilities of the Board are contained in Title III reon.
lating to Government-guaranteed loans for defense producti
Federal
the
of
agency
These loans, which are made through the
dated
Reserve Banks pursuant to Executive Order No. 10161
on V.
Regulati
Board's
the
September 9, 1950, are the subject of
s that
Since the Office of Emergency Planning consider
current
of
support
the
to
l
this authority in the Act is essentia
n
objectio
no
have
would
Board
national defense activities, the
years
four
al
addition
an
for
to the extension of the authority
as provided by the bill.
Sincerely yours,
(Signed) Wm. McC. Martin, Jr.
WM. McC. Martin, Jr.
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Federal Reserve Bank of St. Louis
BOARD OF GOVERNORS
Item No. 8
3/25/66
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
March 25, 1966.
Mr. Aubrey V. Kidd, Vice President,
The Bank of Virginia,
800 East Main Street,
Richmond 14, Virginia.
Dear Mr. Kidd:
This refers to your letter of March 7, 1966, with respect
to the 2 per
cent differential in the rate of interest a member bank
must exact on loans to a depositor upon the security of his time
deposit.
The Board appreciates the public relations problem that
might occur when your bank suggests that the interest
on the deposit
be reduced so that the interest on the loan will not exceed the
maximum prescribed by State law and still be 2 per cent more than
the interest paid on the deposit. When this problem first came to
the Board's attention, your suggestion that the regulation be
amended to permit the interest charged on such loans to be either
2 Per cent more than the rate of interest paid on the deposit or
the maximum permitted by State law, whichever is less, was
considered.
The purpose of this requirement of the regulation is to
Prevent the bank, in effect, from paying a time deposit before its
Taturity by means of a loan, secured by such deposit, bearing
irterest substantially the same as that paid on the deposit. The
:Lard has concluded that this 2 per cent differential is necessary
r maintain the distinction between time and demand deposits. This
particularly true in Virginia where the legal rate on loans is
d Per cent and the bank may pay as much as 5-1/2 per cent on time
tePosits. The arrangement you suggest could practically nullify
he distinction between time and demand deposits.
V
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
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Federal Reserve Bank of St. Louis
1 1 ;(,
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 9
3/25/66
WASHINGTON, D. C. 20551
ADDRESS orractAL CORRIEBPONDIENCE
TO THE BOARD
March 25, 1966.
Nr. William H. Braun,
Jr.,
Assistant Vice President,
Pederal Reserve Bank of New York,
I'lew York, New
10045
York.
tlear Mk. Braun:
This refers to your letter of March 11, 1966, presenting
the
a
question whether a member bank may make a loan to the wife of
;
1- depositor, secured by the husband's time deposit and for
his
2enefit, without requiring interest on the loan to be at least
Per cent more
than the interest paid on the time deposit. You
enclosede
a copy of a letter from the General Counsel of the
Dfleral Deposit Insurance Corporation to a firm of attorneys in
0c:chester, New York, which indicated that such a transaction would
th t be in violation of the first paragraph of section 329.4(d) of
"e Cor poration's
regulation.
Section 217.4(e) of Regulation Q, which contains identical
lancru
den
'
age, provides that a member bank may make a loan to the
'
ratcsitor upon the security of his time deposit provided that the
Pere of interest on such loan shall be not less than 2 per cent
The annum in excess of the rate of interest on the time deposit.
4,_ Precise language of this
provision refers only to a loan
'
itlu the
depositor" upon the security of "his time deposit".
th tbe case presented, however, the bank suggested to the depositor
pa't the arrangement described be followed in order to. avoid
his
ve
'
llTent of a higher rate of interest. Such an arrangement clearly
pur d c ircumvent a requirement of the regulation and defeat its
line°se. Accordingly, it is the Board's opinion that a loan made
kr
"these circumstances must bear interest of not less than 2
cent in excess of the interest paid on the' time deposit.
het.
This does not mean that every loan to a wife secured by
L
u usl-uand s
time deposit must require the 2 per cent differential.
"ample, the wife might operate a separate business and would
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Federal Reserve Bank of St. Louis
1010
William H. Braun, Jr.
-2-
repay the loan from independent means. Each case must be decided
Upon the particular facts and circumstances. However, the bank
Should satisfy itself that the proceeds of the loan are not for
the husband's benefit and the hypothecation of the time deposit
serves the same purpose as an accommodation endorsement.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
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Federal Reserve Bank of St. Louis
1011
BOARD OF GOVERNORS
Item No. 10
3/25/66
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, 0. C. 20551
ADORESO
arriciAL
CORRIESPONOCNOC
TO MC *CARD
March 25, 1966
CONFIDENTIAL (FR)
Mr. Harold T. Patterson, President,
Federal Reserve Bank of Atlanta,
Atlanta, Georgia. 30303
Dear Mx. Patterson:
The Board of Governors approves the payment of salaries
to the following officers of the Federal Reserve Bank of Atlanta,
for the period of April 15 through December 31, 1966, at rates
indicated, which are those fixed by your Board of Directors as
reported in your letter of March 11.
Name
Richard A. Sanders
Harry C. Schiering
Title
Annual
Salary
Vice President
Assistant General Auditor
$16,500
.11,800
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
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Federal Reserve Bank of St. Louis
1012
Item No. 11
3/25/66
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
March 25, 1966
Mr. Richard A. Debs, Secretary,
Federal Reserve Bank of New York,
New York, New York. 10045.
Dear Mr. Debs:
The Board of Governors will interpose no objection
to the leave of absence during March 28 through April 1, 1966,
for Mr. Peter Fousek as reported in your letter of March 18.
It is noted that Mr. Fousek will conduct a series
of lectures and seminars for the Economic Development
Institute of the International Bank for Reconstruction and
Development in Washington, D. C., and that he will receive
compensation from that organization for his services.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
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Federal Reserve Bank of St. Louis
BOARD OF GOVERNORS
Item No. 12
3/25/66
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, O. C. 20551
ADDRESS OFFICIAL CORRESPONOENCE
TO THE BOARD
March 25, 1966
Mr. W. Braddock Hickman, President,
Federal Reserve Bank of Cleveland,
Cleveland, Ohio. 44101
Dear Brad:
Reference is made to your letter of March 15, 1966,
reviewing the services of Martin Morrison and Laird Landis as
consultants to the Federal Reserve Bank of Cleveland, The
Board notes that the Bank has benefited from their work to date,
and that you will review their situation again in six months.
Very truly yours,
(Signed) Merritt Sherman
erritt Sherman,
Secretary.
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Federal Reserve Bank of St. Louis
Item No. 13
3/25/66
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS
OFFICIAL
CORRESPONDENCE
TO THE SOAR°
March 25, 1966.
Mr. Ray D. Young, Vice President
and Cashier,
National Bank of Detroit,
Detroit, Michigan.
48232
Dear W. Young:
This refers to your letter of February 9, 1966, requesting
the Board to approve an amendment to section 204.2(b) of Regulation D
t0 permit member banks to deduct from the amount of their gross time
,
ueposits the amounts of "time deposit balances due from other member
banks.fl
The tenth paragraph of section 19 of the Federal Reserve
Act (12 U.S.C. 465) provides as follows:
"In estimating the reserve balances required by this
Act, member banks may deduct from the amount of their gross
demand deposits the amounts of balances due from other banks
• . . and cash items in process of collection payable immediately upon presentation in the United States, within the
meaning of these terms as defined by the Board of Governors
of the Federal Reserve System." (Emphasis added.)
In the absence of an enabling amendment to section 19, the
Board is unable to permit, by regulation or otherwise, a deduction
for time deposits due from other banks. Any such change must necessarily be accomplished by an amendment to the statute.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
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Federal Reserve Bank of St. Louis
101.1
BOARD OF GOVERNORS
Item No. 14
3/25/66
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL COPIRCIIIPONDCNCC
TO THE BOARD
March 25, 1966
'Ir. J. J. Somers, Controller,
Commodity Credit Corporation,
United States Department of Agriculture,
Washington, D. C. 20250
Dear Mr. Somers:
This is in reply to your letter of March 11, 1966,
requesting the Board to declare a special series of certificates
of interest, which has recently been issued by the Commodity Credit
Corporation ("CCC"), eligible as security for advances under the
eighth paragraph of section 13 of the Federal Reserve Act
(12 U.S.C. 347).
It is understood that the new special series of
ificates represents an interest in a pool of notes evidencing
certificates
outstanding loans made under price support programs of CCC. Currently, CCC issues certificates of interest which evidence participation in pools of price support program loans which are interest
Dearing and transferable only among banking institutions. The
new special series of certificates are noninterest bearing and are
Payable to bearer. It is further understood that in some cases
the underlying notes are payable on demand, and that the loans
which have a specified maturity date will mature within nine
months.
Section 201.2(a)(2) of Regulation A (12 CFR 201.2)
Provides as follows:
"In the event notes which evidence loans made
Pursuant to a commodity loan program of the Commodity
Credit Corporation and which comply with the maturity
requirements of § 201.3(a) have been deposited in a
pool of notes operated by the Commodity Credit Corporation,
the certificate of interest issued by the Commodity
Credit Corporation which evidences the deposit of such
notes may be accepted as security for an advance made
to a member bank under this paragraph."
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Federal Reserve Bank of St. Louis
Mr. J. J. Somers
-2-
In a 1917 ruling, the Board took the position that demand
Paper is ineligible for discount under the provisions of the Federal
Reserve Act because such paper is not in terms payable within the
prescribed maturity period but, at the option of the holder, may not
be Presented for payment until after that time (1917 Fed. Res. Bull. 378).
On the basis of that ruling, the new certificates would not fall within
the provisions of the section of Regulation A above quoted since the
underlying notes would not comply with the maturity requirements of
the statute and the regulation.
However, the Board has reconsidered its previous ruling
and has concluded that, since demand paper as a matter of law is due
and payable on the date of its issue, such paper would satisfy the
maturity requirements of the statute. It is the Board's view,
therefore, that demand paper which otherwise meets the eligibility
requirements of the Federal Reserve Act and Regulation A is eligible
for discount and as security for advances.
Accordingly, the special series of certificates of interest
of the kind described in your letter will be considered eligible as
security for advances by Reserve Banks to member banks under the
eighth paragraph of section 13 of the Federal Reserve Act.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
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Federal Reserve Bank of St. Louis
10
Item No. 15
3/25/66
TITLE 12 - BANKS AND BANKING
CHAPTER II - FEDERAL RESERVE SYSTEM
SYSTEM
SUBCHAPTER A - BOARD OF GOVERNORS OF THE FEDERAL RESERVE
[Reg. A]
PART 201 - ADVANCES AND DISCOUNTS
BY FEDERAL RESERVE BANKS
Demand Paper
5 201.107 Eligibility of demand paper for discount and as security
for advances by Reserve Banks.
made in
(a) The Board of Governors has reconsidered a ruling
1917 that demand notes are ineligible for discount under the provisions
Of the Federal Reserve Act.
(1917 Federal Reserve Bulletin 378.)
the second
(b) The basis of that ruling was the provision in
Paragraph of section 13 of the Federal Reserve Act that notes, drafts,
and bills of exchange must have a maturity at the time of discount of
n't more than 90 days, exclusive of grace. The ruling stated that
"a demand note or bill is not eligible under the provisions of the
days,
act, since it is not in terms payable within the prescribed 90
until
but, at the option of the holder, may not be presented for payment
after that time."
r, that demand
(c) It is well settled as a matter of law, howeve
Paper is due and payable on the date of its issue.
The generally accepted
legal view is stated in Beutel's Brannan on Negotiable Instruments Law,
at Page 305, as follows:
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Federal Reserve Bank of St. Louis
1018
-2-
"The words 'on demand' serve the same purpose as words
making instruments payable at a specified time. They fix
maturity of the obligation and do not make demand necessary,
but mean that the instrument is due, payable and matured
when made and delivered."
(d) Accordingly, the Board has concluded that, since demand
paper is due and payable on the date of its .issue, it satisfies the
maturity requirements of the statute.
Demand paper which otherwise
meets the eligibility requirements of the Federal Reserve Act and
this part (Regulation A) therefore, is eligible for discount and as
security for advances by Reserve Banks.
(12 U.S.C. 248(i).
Interprets 12 U.S.C. 343.)
Dated at Washington, D. C., this 25th day of March, 1966.
By order of the Board of Governors.
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
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Federal Reserve Bank of St. Louis
1.019
BOARD OF GOVERNORS
Item No. 16
3/25/66
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
vse044
4
ADDRESS
OFFICIAL
CORRESPONDENCE
TO THE BOARD
March 25, 1966
The Elyria Savings & Trust Compa
ny,
103 Court Street,
Elyria, Ohio. 44305
Gentlemen:
It has recently come to the attention of the Board of
Governors that The Elyria Savings & Trust Company ("bank") converted
from a State to a national bank charter, effec
tive March 1, 1966.
The proposed conve
rsion was approved by the bank's shareholders
at the bank's annual meeting, held on Febru
ary 2, 1966, in connection with which the bank's management solicited proxi
es from its
sharehol
ders.
The capital stock of the bank became registered under
section 12(g) of
the Securities Exchange Act of 1934 ("1934 Act")
O
June 28, 1965, and, as the bank was advised by the Board
's letter
dated June
14, 1965, it thereupon became subject to section 14 of
he 1934
Act and section 206.5 of Federal Reserve Regulation F,
iS
ecurities of Member State Banks". Section 14(a) of the 1934 Act,
n effect, provides that it shall be unlawful for a member State
bank to
solicit proxies with respect to its registered stock in
contraven
tion of the rules and regulations adopted by the Board
th
ereunder. Section 206.5 and Form F-5 of Regulation F contain such
rules and
regulations.
As stated by the U. S. Supreme Court in J. I. Case v.
Eorak, 377 U. S. 426,
430 (1964):
"The purpose of § 14(a) is to prevent management
or others from obtaining authorizat
ion for corporate
action by means of deceptive or inadequate disclosure
in proxy solicitati
on . . . . 'Too often proxies are
solicited without explanation to the stockholder of
the real nature of the questions for which autho
rity
to cast his vote is sough
t.' S. Rep. No. 792,
73rd Cong., 2d Sess., 12."
No attempt appears to have been made by the bank to comply
the provisions of Regulation
F with respect to the proxy
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Federal Reserve Bank of St. Louis
I
The Elyria Savings & Trust Company
-2-
solicitation relating to the annual meeting at which the conversion
to a national charter was approved. Of primary
importance, most
of the information required to be set forth in the proxy statement,
as prescribed by Federal Reserve Form F-5, has been omitted.
In
addition, the bank did not comply with the requirements of section 206.5(c) and 206.5(f) of Regulation F,1 elating to the mailing
of the bank's annual report to stockholders-i and the filing of
such annual report and proxy soliciting material with the Board.
In particular, the Board is concerned with the disclosure,
or more accurately, lack of disclosure, in the bank's proxy statement
concerning the proposal to convert to a national charter. It is the
Board's opinion that such description is materially inadequate to
explain to stockholders "the real nature of the questions for which
authority to cast his vote is sought". J. I. Case
v. Borak, supra.
At a minimum, the following items should have
been fully discussed:
(a) the principal advantages and disadvantages to
the bank of the proposed conversion, including future
Operations proposed but not presently conducted by the
bank;
(b) a comparison of the legal attributes of the bank's
stock as a State bank and as a national bank;
(c) changes in capitalization and other material
charter changes, if any;
(d) dissenter's rights, if any;
(e) the tax effects of the transaction on the bank's
stockholders; and
(f) any other changes that may materially affect
the rights of the bank's stockholders.
In addition, the statement, in the bank's proxy statement,
that the conversion will provide "for better methods for obtaining
eePital funds and, therefore, increase its [the bank's] lending limits"
Ilould appear to be materially misleading, in the absence of more
sPecific
information.
p
t should also be noted that the financial statements contained
11 the bank's annual report to stockholders do not meet the requireents of Regulation F. See interpretation of the Board of Governors,
'
"1 965 F. R. Bulletin 1707 (December ).
T
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Federal Reserve Bank of St. Louis
1021
The Elyria Savings & Trust Company -3-
Accordingly, it is the Board's opinion that the proxies
in question were solicited in violation of section 14(a) of the
1934 Act. In addition to the penalties for this violation specifically
Provided by the 1934 Act, the bank Should be aware that the U. S.
Supreme Court has held that a stockholder may have a private right
to relief, including the remedy of rescission, for this type of
violation. J. I. Case v. Borak, supra.
Since it appears that the legality of the conversion
from a State bank to a national bank is not free from doubt, it
is suggested that the bank call a special meeting of stockholders
to ratify all actions previously taken and resolicit proxies, in
accordance with the requirements of Federal Reserve Regulation F,
in connection therewith.
A copy of this letter is being sent to the Comptroller
of the Currency.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
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Federal Reserve Bank of St. Louis
1022
BOARD OF GOVERNORS
"
.....•
• co0?Cot,
•4:...
.0
Item No. 17
3/25/66
OF THE
FEDERAL RESERVE SYSTEM
•
WASHINGTON, O. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE EIOARD
March 25, 1966
Comp troller of the Currency,
Treasury Department,
Washington, D. C. 20220
Dear Mr. Comptroller:
Enclosed is a copy of the Board's letter, dated today,
to The Elyria Savings & Trust Company, Elyria, Ohio, with respect
to its recent conversion to a national bank.
In view of judicial decisions with respect to corporate
action taken without compliance with applicable requirements of law
°r governmental regulation, it appears that the legal status of the
flayria institution as a national bank is open to question.
e
.articularly relevant is the decision of the U. S. Supreme Court
in J. 1. Case v. Borak (cited in the enclosed letter), which relates
sPfecifically to corporate action taken in violation of section 14(a)
the Securities Exchange Act of 1934 and regulations pursuant
thereto.
This matter is brought to the attention of your Office,
as well
as the bank itself, in order that the supervisory authories may assist in developing a course of action that will remedy
Lue existing situation, as far as possible.
Pursuant to the request of your Office of March 2, 1966,
the
f re are enclosed two copies of the initial stock ownership reports
,r.ederal Reserve Forms F-7) filed by the bank's officers and
.' ectors. No statements of changes in beneficial ownership
kl''ederal Reserve Forms F-8) have been filed.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
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Federal ReserveClOSures
Bank of St. Louis
1_023
Item No. 18
3/25/66
UNITED STATES OF AMERICA
BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D. C.
•••
00
In the
Matter of the Application of
SECURITY NEW YORK STATE CORPORATION,
ROCHESTER, NEW YORK,
f
ilor app
royal of action to become a bank
(„
,
01ding company through the acquisition
'IP to 100 per cent of the outstanding
ting shares of Security Trust Company
_ Rochester, Rochester, New York, and
r:'fle State Bank
of Seneca Falls, N. Y.,
eneca Falls, Ilew
York.
4.6
ORDER APPROVING APPLICATION UNDER
BANK HOLDING COMPANY ACT
There has come before the Board of Governors, pursuant
to section 3(a)(1) of the Bank Holding Company Act of 1956
(12 U.S.C. 1842(a)(1)) and section 222.4(a)(1) of Federal Reserve
Regulation Y (12 CFR 222.4(a)(1)), an application by Security New
Y°tIc State Corporation, Rochester, New York, for the Board's prior
aPProvai
of action whereby Applicant would become a bank holding
COtc,„
P4nY through the acquisition of up to 100 per cent of the outStand 4
'flg voting shares of Security Trust Company of Rochester,
4ehester, New York, and The State Bank of Seneca Falls, N. Y.,
Seneca
Falls, New York.
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Federal Reserve Bank of St. Louis
1024
-2-
In accordance with section 3(b) of the Act, the Board
notified the
New York State Superintendent of Banks of the receipt
°f the application and requested his views and recommendation.
The
Superintendent
and the New York State Banking Board recommended
aPProval of
the application.
Notice of receipt of the application was published in the
Federal Register on November 3, 1965 (30 Federal Register 13914),
PrtIviding an opportunity for interested persons to submit comments
and views with respect to the proposed acquisition.
The time for
"g such comments and views has expired, and all those received
have
been considered by the Board.
IT IS HEREBY ORDERED, for the reasons set forth in the
ilcsard's Statement of this date, that said application be and hereby
18 approved, provided that the acquisition so approved shall not be
cens ummated (a) within seven calendar days after the date of this
Order
or (b) later than three months after said date.
Dated at Washington, D. C., this 25th day of March, 1966.
By order of the Board of Governors.
Voting for this action:
Unanimous, with all members present.
Governor Brimmer was not a member of the Board on the
date of the Board's decision.
(Signed)
Merritt Sherman
Merritt Sherman,
Secretary.
(stAL)
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Federal Reserve Bank of St. Louis
102S
Item No. 19
3/25/66
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
APPLICATION BY SECURITY NEW YORK STATE
CORPORATION, ROCHESTER, NEW YORK, FOR PRIOR APPROVAL
OF ACTION TO BECOME A BANK HOLDING COMPANY
STATEMENT
York
Security New York State Corporation, Rochester, New
("APPlicant"), has filed with the Board, pursuant to section 3(a)(1)
°f the Bank Holding Company Act of 1956 ("the Act"), an application
the
approval of action to become a bank holding company through
acquisition of up to 100 per cent of the outstanding voting shares
uf Security Trust Company of Rochester, Rochester, New York ("Security
Falls,
Tl'ust"), and The State Bank of Seneca Falls, N. Y., Seneca
New York
("Seneca").
As
Views and recommendation of supervisory authority. tequired by section 3(b) of the Act, notice of receipt of the
aPPlication was sent to the New York State Superintendent of Banks
tequesting his views and recommendation.
The New York State
Super intendent of Banks and the New York Banking Board recommended
approval of the application and submitted to the Board a copy of a
rilern°randum from the Superintendent addressed to the New York Banking
Boa
rd discussing the reasons for approval of the proposal.
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Federal Reserve Bank of St. Louis
1026
-2-
Statutory factors. - Section 3(c) of the Act requires that
the Board, in determining whether to approve this application, take
into consideration the following five factors: (I) the financial
history and condition of the proposed holding company and the banks
concerned; (2) their prospects; (3) the character of their management;
(4) the convenience, needs, and welfare of the communities and the area
eoncerned; and (5) whether or not the effect of the proposal would be
to expand the size or extent of the bank holding company system involved
beYcnd limits consistent with adequate and sound banking, the public
interest, and the preservation of competition in the field of banking.
Financial history and condition, and prospects of Applicant
and the banks concerned.
financial history.
Applicant, being newly formed, has no
Its condition and prospects depend in major respects
uPcn those of its proposed subsidiary banks.
4(3ted
For the reasons hereafter
Applicant's pro forma financial condition and prospects are
sat
isfactory.
Security Trust was organized in 1892 under State charter and,
st 1
-line 30, 1965,1/ operated 23 offices-1/ in New York Banking District
4ghte
It offers a full range of commercial banking services, including
"rPnrate and personal trust facilities.
With approximately $260 million
Of deposits, it is the third largest bank in the State's Eighth Banking
I)istrict, and serves all six counties in that district.
Applicant
tl„vnless otherwise indicated, all bank deposit and loan data are as of
"Is date, and data as to banking offices are as of December 31, 1964.
2 „wo
d1 offices have been approved by the Board, but are not
yet
in Operation.
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Federal Reserve Bank of St. Louis
1027
-3-
states that Security Trust's deposits have almost doubled in the five
Years preceding the application, without benefit of mergers or consolidatio ns.
The record shows that its not operating earnings increased
Ircm about $1.3 million in 1959 to about $1.7 million in 1964.
The
financial history and condition of Security Trust are considered
satisfactory.
Security Trust's prospects, related as they are to a prosperous,
1.13idlY growing section of upstate New York, appear satisfactory whether
Security Trust operates as a subsidiary of Applicant or continues its
illdependent operation.
Since New York State law now prevents Security
'rrust from inter-district branching, Security Trust's prospects are
enhanced by Applicant's plan to make Security Trust the leading bank
in a regional holding company system that will serve not only the Finger
3/
Lak
es region,— which includes District Eight and extends across several
Other banking districts, but will serve also the greater Rochester
economic area.—
Seneca, under a State charter received in 1902, operates a
si
4gle office in District Six and offers the usual type of smallhank services.
Deposits are reported to have grown from under
S7 million in 1959 to approximately $11 million in 1965.
During
he five years ending June 30, 1965, loans reportedly increased about
This area, considered to extend between Buffalo and Syracuse, and
,!'cm the Pennsylvania border to Lake Ontario, includes, in addition to
ulstrict Eight, parts of Districts Six, Seven, and Nine.
4/ A
'As defined by the New York State Department of Commerce, this area
i
eludes nine counties, of which three are in District Nine, one in
'1.strict Six, and five in District Eight.
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Federal Reserve Bank of St. Louis
1028
-4-
60 per cent, to over $6 million.
The increase in earnings shown for
Seneca (from about $51,000 in 1962 to approximately $70,000 in 1964)
compares favorably with that of banks of comparable size.
On the
record presented, the financial history and condition of Seneca are
sat
isfactory.
Seneca's prospects, like those of Security Trust, appear
satisfactory whether Seneca becomes a subsidiary of Applicant or remains an
independent bank.
The area served by Seneca, part of the
gteater Rochester economic area, has experienced a gradual but steady
ec°flomic development, and, like the Rochester area, its prospects for
ec)ntinued and substantial economic growth appear favorable.
Applicant
asserts, however, that Seneca's growth has not kept pace with the areas
tequirements for banking services because of Seneca's lack of capital
With Which to provide new and expanded services, and also by reason
of the competition offered by larger, more aggressive banks operating
in its service area.
Within its service area, Seneca has felt most
directly the competitive force of a branch of the Lincoln National
Ilank and Trust Company of Central New York, Syracuse, an institution
With
$165 million of deposits.
Applicant urges that the greater market-
abilitY of its shares over those of Seneca would enable Applicant
nore
easily and assuredly to provide for Seneca's capital require8.
While the record does not establish an inability by Seneca
81lecessfully to market its shares, it is reasonable to assume that
APPlicant's assistance as proposed would facilitate the raising of
caPital considered necessary to expand and implement Seneca's services
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Federal Reserve Bank of St. Louis
1029
-5-
and, thus, more aggressively compete with banks in its area.
To the
extent that the improvement in Seneca's capital position would be
accomplished by Applicant's proposal, Seneca's prospects as a subsidiary
Of Applicant are consistent with and provide some slight affirmative
Ileight for approval of the application.
Management. - The history of operations of both Security Trust and
Seneca reflects sound, experienced, and capable managements.
The manage-
ment of Applicant, to be drawn from the two proposed subsidiary banks,
is expected to be similarly satisfactory, and both banks and their respective areas will be represented in the management of the holding
CoMPany.
Applicant states that no changes are currently contemplated
Ilith respect to their boards of directors or principal officers.
Manage-
meat succession is not a significant factor in this application.
Appli-
cant urges, however, that the attraction and retention of junior officers,
11110 would be qualified to succeed present management, are difficult for
a bank of the size of Seneca, and that the proposed affiliation would
facilitate for Seneca the acquisition and training of capable management
as needed.
ihile the Board recognizes that the proposed affiliation
may offer
reasonable assurance of a continuity of competent and experienced
clzecutive management, this consideration is of little consequence in the
subject application, no showing having been made of a present or anticiPated lack of such personnel.
The Board concludes that considerations
'elating to the factor of management are consistent with, but provide
l
little affirmative support for, approval.
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Federal Reserve Bank of St. Louis
1030
-6-
Convenience, needs, and welfare of the communities and the
areas
concerned. - As indicated earlier, Security Trust, with 23 offices
and total deposits of $260 million, is the third largest bank in District
5/
Etght
all six counties in that
area
and has as its primary service
district.
Its proposed affiliation with the much mailer bank in
District Six may be expected to have little, if any, effect on the convenience, needs, and welfare of the communities and the area served by
The principal effect would appear to be in the area
Security Trust.
served by Seneca.
Seneca is located in Seneca County, approximately midway between
4ehester in District Eight and Syracuse in District Six.
The county
is cne of seven in District Six and adjoins the eastern border of
bistrict
Eight. Seneca's primary service area, with an estimated popula6/
tio
n of 20,000 persons, includes the village and township of Seneca
Palls and somewhat less than the remainder of the northern half of Seneca
C°114tY.
Seneca Falls is considered the economic center of Seneca County
and the site of most of its local industrial development,
Several large
. and well-established industries, such as Sylvania Electric Products, Inc.,
i:3111d8 Pumps, Inc., and Seneca Knitting Mills, Inc., are located in
Senn
-'ca Falls,
Applicant states that the nine leading companies in
Sehn
"'ca Falls employ over 3,100 people, earning an annual income of
ba 1.7e area from which Applicant estimates more than 75 per cent of the
's deposits of individuals, partnerships, and corporations are derived,
4
po
derived from 1963 and 1964 publications of
the Pulation estimates are
State of New York's Department of Commerce.
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Federal Reserve Bank of St. Louis
1_031
4Pproximately $16 million.
An additional 2,300 persons, with an
estimated combined annual income of approximately $13 million, work
at the Seneca
Army Depot and the Willard State Hospital, to the south
of the village of Seneca Falls.
A $22 million sugar beet refinery is
under construction 11 miles from Seneca Fano, and construction has
begun on Eisenhower College at a site two miles east of Seneca Falls.
The area served by Seneca is also served by the First National
flank of Waterloo, which is larger than Seneca, by the aformentioned
b::anch of the Lincoln National Bank and Trust Company of Central New
csrk, and by a mutual savings bank.
includiug credit needs
While the service requirements,
of the smaller businesses, merchants,
and resi-
dents in the area appear to be served by the Seneca Falls banks, there
is
evidence that the local banks have not satisfied the credit needs of
latger companies in the area, and that these concerns look primarily to
bao
ks outside the county for their credit needs.
Analysis of the Seneca
1°4n-deposit ratio and of the make-up of its loan portfolio indicates
that there
is ample room for increase in the number and types of loans
that could be made.
A more aggressive loan policy than that followed by
Selleca is likely as a result of the proposed affiliation.
While the instant application concerns primarily the areas
4tved by Security Trust and Seneca, Applicant contemplates a regional
hold4 _
"ig company which, it contends, is needed to serve and assist in
the d
eveiopment of the greater Rochester economic area. Applicant asserts
that State law prevents, except through the medium of a holding company,
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Federal Reserve Bank of St. Louis
1032
••••
•••
the extension of services of the larger commercial banks across banking
districts, and prevents Security Trust from serving the portion of the
Rechester economic area that is located outside the boundaries of
District Eight.
In this connection, it is to be noted that the New York
State Legislature, in declaring its policy with respect to bank holding
cernPanies in the State, stated that one of the objectives of the State's
bank holding company legislation of 1961 was "that healthy and nondestructive competition be fostered among all types of banking organizations
14ith.
-in natural economic and trade areas".21
It is the Board's judgment that approval of Applicant's proposal
an "upstate-regional" bank holding company system would enable regional
illstitutions to provide banking services within such trade areas; would
inetease and improve the scope and nature of available banking services,
Pat.ticularly in the Seneca area; and would permit entry in the upstate
rilerket area of an additional banking force sized to meet existing competiti°n.
These considerations are not only consistent with the needs,
e"venience, and welfare of the communities affected, but offer affirmative support for approval of the application.
Effect of proposed acquisition on adequate and sound
ha
, thepublic interest
and banking competition. - Security
Iruet's 23 offices are located in the Eighth District; Seneca's
°41Y office is located and competes in the Sixth District.
That
ee is over 50 miles from Security Trust's head office and more
te to section 141 of the New York Banking Law.
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Federal Reserve Bank of St. Louis
1033
-9-
than 15 miles from Security Trust's closest office.
There is no
overlap of primary service area of any office of Security Trust and
that
of Seneca.
The deposit and loan accounts held by Seneca,
°riginating within the area serviced by Security Trust, are negligible
ill size and number in relation to the total deposits and loans held
by
Seneca, and in relation to the total deposit and loan business
ginating in that area.
While the dollar amounts of deposits and loans derived by
Security Trust from Seneca's service area are not insignificant in
relation to Seneca's total deposits and loans, analysis of Security
Trust's deposits and loans originating in Seneca's area discloses
that a major portion of the dollar volume of both represents a few
large accounts derived from long-established customers of Security
Trust now located in Seneca's area.
The evidence before the Board
establishes that competition between the two banks for deposits and
loans is virtually nonexistent.
Further, in view of their distinctly
seParate service areas, the location of competing banking offices
between their nearest offices, and the existing legal impediment in
he State to branching across district lines, there appears to be
little likelihood that any significant future competition between the
two
Proposed subsidiaries will be foreclosed.
The Board has considered also the competitive effect of
(34su 1 mation of this proposal on other banks within each of the
are
as served by the proposed subsidiary banks.
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Federal Reserve Bank of St. Louis
The affiliation of
1034
-10-
Seneca, a bank with $11 million of deposits, and Security Trust, a
$260 million institution, will have no measurable impact on either the
larger banks or the 23 smaller banks located in the Eighth District.
Nor does it appear to the Board that Seneca l s affiliation with Security
Trust under Applicant's ownership will adversely affect either of Seneca's
two competitors located in its primary service area, or the seven other
banks operating a total of nine offices within an approximate radius of
15 miles of Seneca Falls.
The businesses and residents situated in
Senecas service area will be the beneficiaries of the more vigorous
competition to be offered to the First National Bank of Waterloo, a bank
nearly half again the size of Seneca, and the office of Lincoln National
sank of Syracuse.
In a larger banking market area, the proposed affilia-
tion will provide more effective competition for the banks of Marine
Midland Corporation, the only holding company with banking offices in
the Sixth District, which offices control 23 and 16 per cent, respectively,
Of the total deposits of all commercial banks and of all banks in the
district.
Within the Eighth District, consummation of Applicant's proposal
bring to 40 per cent each the banking offices and total deposits of
all commercial banks under holding company control, and to 27 per cent
the deposits of all banks under such control.
The extent to which
eltisting holding company control of banking resources would be increased
bY consummation of this proposal does not, in the Board's judgment, preapproval of the proposal since, as earlier found, the affiliation
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Federal Reserve Bank of St. Louis
1035
-11-
cl Seneca, with $11 million of deposits, and the $260 million Security
Trust, with offices in each of the District's six counties, will have
nO
significant impact on Security Trust's competitive position.
On the basis of the foregoing, and in view of the negligible
State
-wide impact that Aoplicant's formation will have, the Board concludes that Applicant's acquisition and operation of Security Trust
and Seneca
would not result in the creation of a bank holding company
sYstem, the size or extent of which would be beyond limits consistent
with adequate and sound banking, the public interest, and the preservati°n Of Competition in the field of banking.
At the time this application was filed with the Board,
"tification of the Board's receipt thereof was given to the Comptroller
Of
the Currency and the United States Department of Justice. No comments
°I. views were submitted by either on this application.
However, by
letter dated February 10, 1966, the Comptroller submitted a statement
Of °Pposition to applications pending before the Board whereby BT New
Corporation and Charter New York Corporation, both of New York,
seek the Board's approval of the formation of bank holding companies
14der
the Act.
Each of these applications involves, as does the present
Case,
the proposed acquisition by a bank holding company of stock of
banks
located in more than one of the State's banking districts.
The Comptroller recommended that the BT New York Corporation
and ,
kalarter New York Corporation applications be disapproved and, as
basil _
'
s for such recommendation, referred to an earlier Board letter
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Federal Reserve Bank of St. Louis
1036
-12-
addressed to a national bank located in New York City expressing the
Board's view that the proposed ownership by that bank of a majority of the
stock of an upstate bank would appear to violate provisions of Federal
law prohibiting the establishment and operation of branch offices by
nattonal banks.
The Comptroller expressed the view that the Board,
having taken the aforementioned position in reference to the acquisition
by a national bank of the stock of another bank, was estopped from
aPProving applications involving the acquisition of bank stocks by nonbank
bank holding companies, for the stated reason that such acquisitions
Imuld enable State banks to circumvent the prohibitions of the branch
banking statutes of the State of New York."
Although the Comptroller's views were not directed to the
aPPlication by Security New York State Corporation, the similarity of
that application to the two applications that were the object of the
Comptroller's views makes appropriate, in the Board's judgment, treatment
herein of the Comptroller's position.
In the Board's judgment, the proposals involved in the three
bank holding
company applications are patently and decisively distin
guishable from that involving the proposed acquisition by a national
bank of the stock of another bank.
LL
The latter case, in the Board's
involved bank ownership, control and, thus, operation of another
bank in an area where a "direct" branch office would be prohibited to
the acquiring bank. In the holding company applications before the
4ard, not only are the holding companies' ownership and control of the
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Federal Reserve Bank of St. Louis
03'
t
-13-
banks involved not prohibited by Federal or State law but, on the
contrary, are expressly authorized by the Bank Holding Company Act of
1956 and Article III-A of the New York Banking Law.
By provisions of
the National Bank Act (sections 5136 and 5155 of the Revised Statutes),
Congress made clear its intention to restrict and regulate the extent
to
which a national bank may own and control additional banking offices.
The national bank proposal that was the subject of the Comptroller's
letter fell, in the Board's opinion, within the scope of Congressional
Pro
hibition.
As earlier indicated, the applications pending before the
Board under the Bank Holding Company Act, including that of Security
1147
York State Corporation, are clearly of the type approval of which
is
Permitted under both Federal and State law.
The Board concludes that the legislative history of the Bank
Rol •
dlng Company Act clearly establishes Congressional intention that
Pr°Posed bank holding company formations and operations not be subjected
to statutory limitations imposed on branch banking.
Further, a similarly
lear intention is evidenced by the enactment in the State of New York
°f bank holding company legislation, pursuant to which the three applieati°ns now before the Board have been approved by the State Banking
1)ePart--ment upon the recommendation of the Superintendent of Banks.
the
For
foregoing
reasons, the Board is unable to concur in, or make appli-
cable to the cases before it, the rationale urged by the Comptroller.
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Federal Reserve Bank of St. Louis
1038
-14-
Conclusion. - On the basis of all the relevant facts as
contained in the record before the Board, and in the light of the
factors set forth in section 3(c) of the Act, it is the Board's judgment
that the proposed transaction would be consistent with the public
interest and that the application should therefore be approved.
Ilarch 25, 1966.
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Federal Reserve Bank of St. Louis
1039
BOARD OF GOVERNORS
Item No. 20
3/25/66
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADOREIIII
OFFICIAL
CORRESPONDENCIE
TO THIC •OARD
March 23, 1966
Mr. John L. Nosker, Vice President,
Federal Reserve Bank of Richmond,
23213
Richmond, Virginia.
Dear Mr. Nosker:
In accordance with the request contained in
your letter of March 18, 1966, the Board approves the
appointment of L. Rex Dazey as an assistant examiner for
the Federal Reserve Bank of Richmond, effective today.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
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Federal Reserve Bank of St. Louis
1040
Item No. 21
3/25/66
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS
orrociAL
CORRESPONDENCE
TO THE !WARD
March 25, 1966
Mr. Joseph R. Campbell, Vice President,
Federal Reserve Bank of Philadelphia,
Philadelphia, Pennsylvania. 19101
Dear Mr. Campbell:
In accordance with the request contained in
your letter of March 16, 1966, the Board approves the
appointment of James C. Kogel as an assistant examiner
for the Federal Reserve Bank of Philadelphia. Please
advise the effective date of the appointment.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
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Federal Reserve Bank of St. Louis
BOARD OF GOVERNORS
Item No. 22
3/25/66
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDREBB
orrictAL
CORRIESPONOCNCE
TO TMC BOARD
March 24, 1966.
Dear sir:
The indicated number of copies of the following forms are
bet-ng
forwarded to your Bank under separate cover for use of State
member banks and their affiliates in submitting reports as of the
next call date. A copy of each form is attached.
Number of
Form FR 105 (Call No. 179), Report of Condition
of State member banks.
Form FR 105e (Revised December 1965), Publisher's
copy of report of condition of State member
banks.
Form FR 105e-1 (Revised December 1965), Publisher's
copy of report of condition of State member banks.
Form FR 220 (Revised March 1952), Report of affiliate
or holding company affiliate.
Form FR 220a (Revised March 1952), Publisher's copy
of report of affiliate or holding company affiliate.
The faces of the forms are identical in all substantive respects
to those used for the December 1965 call. As for other recent spring and
!
all calls the supporting schedules on the reverse have been eliminated
'
1{oept for the items required for deposit insurance assessment purposes.
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Federal Reserve Bank of St. Louis
1042
-2-
The memoranda items required for reconciliation of differences in national
and State bank reporting procedures with respect to repurchase transactions
are included. The valuation reserves on loans and securities items have also
,°_een included but the items pertaining to averages of deposits and loans
neve been eliminated for consistency with the forms being used for nonmember
Dtate and national banks. The same form is being printed by the Federal
S
,eposit Insurance Corporation for distribution to insured nonmember State
panics and by the Office of the Comptroller of the Currency for distribution
to national banks.
The average deposit and loan items have been retained on the
Publisher's copy. However, since they are not as pertinent for this call
as for the
mid-year and year-end calls when "window dressing" has been a
Problem, reporting banks should be advised that publication is optional.
..h Comptroller of the Currency is not requiring publication of these items
'ue
clir this call. Reporting banks might also be advised that the word "Other"
4 the captions for "Other loans and discounts" and "Other liabilities for
borrowed money" need not appear in published reports when no Federal funds
transactions are reported on the call date. This apparently has been a
Source of confusion to some users of published reports.
A memorandum describing the special keypunching and processing
Procedures in effect for this call will be sent in the near future. It
,
anticipated that a special abbreviated card format and edit procedures
ill be adopted for this one call. It is unlikely that most Reserve Banks
_91 find it practical to duplicate these edit procedures for processing
IC the Reserve Banks, and procedures adopted at the Board should eliminate
'
this burden.
Z
It will still be necessary for the Reserve Banks to make the
sPecial adjustments in national bank reports for differences in treatof repurchase and resale transactions. These adjustments were
described in detail in the Data Processing Technical Memorandum No. 3
sated December 28, 1965. The burden of such adjustments will be reduced
ince it will not be necessary to carry these adjustments to the loan
nd Government securities schedules. It will not be necessary to advise
wle Board of adjustments made.
Very truly youpi:,
AAA-0^
Merritt Sherman,
Secretary.
Enc
losureS.
To TUE PRESIDENTS OF ALL FEDERAL RESERVE BANKS.
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
@FedFRASER