Full text of Minutes of the Board of Governors of the Federal Reserve System : Meeting Minutes, March 31, 1964, Volume 51, Part 3

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

Minutes for

To:

Members of the Board

From:

Office of the Secretary

March

3l 1964

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. Martin
Gov. Mills
Gov. Robertson
Gov. Balderston
Gov. Shepardson
Gov. Mitchell
Gov. Daane

.1_0?3
Minutes of the Board of Governors of the Federal Reserve
System on Tuesday, March 31, 1964.

The Board met in the Board Room

at 10:00 a.m.
PRESENT:

Mt.
Mr.
Mt.
Mr.
Mr.

Martin, Chairman
Balderston, Vice Chairman
Mills
Shepardson
Daane
Sherman, Secretary
Kenyon, Assistant Secretary
Hackley, General Counsel
Farrell, Director, Division of Bank
Operations
Mr. Solomon, Director, Division of Examinations
Mr. Shay, Assistant General Counsel
Mr. Goodman, Assistant Director, Division of
Examinations
Mr. Leavitt, Assistant Director, Division of
Examinations
Mrs. Semia, Technical Assistant, Office of the
Secretary
Mr. Egertson, Supervisory Review Examiner,
Division of Examinations
Mr. Poundstone, Review Examiner, Division of
Examinations
Mr.
Mr.
Mr.
Mr.

Ratification of action (Item No. 1).

The action taken on

March 30, 1964, in sending a telegram to the Federal Reserve Bank of
San Francisco approving the operation in temporary quarters of the
Crescent City, California, branches of United California Bank, Los
Angeles, California, and Wells Fargo Bank, San Francisco, California,
was ratified by unanimous vote.

A copy of the telegram is attached as

Item No. 1.
Discount rates.

The establishment without change by the Federal

Reserve Bank of Boston on March 30, 1964, of the rates on discounts and

10'74
3/31/64

-2-

advances in its existing schedule was approved unanimously, with the
understanding that appropriate advice would be sent to that Bank.
Circulated items.

The following items, copies of which are

attached to these minutes under the respective item numbers indicated,
were approved unanimously:
Item No.
Letter to Five Points National Bank of Miami,
Miami, Florida, granting its request for permission to maintain reduced reserves.

2

Letter to the Federal Reserve Bank of San
Francisco waiving the assessment of penalties
Incurred by Zions First National Bank, Salt
Lake City, Utah, because of deficiencies in
its required reserves.

3

Letter to the Federal Deposit Insurance Corporation regarding the application of Greenfield
State Bank, Bakersfield, California, for continuation of deposit insurance after withdrawal
from membership in the Federal Reserve System.

1.

Letter to Wells Fargo Bank, San Francisco,
California, approving the establishment of a
branch in Pleasant Hill, California, in lieu
of one previously approved to be established
In Concord.

5

Cumulative voting in election of national bank directors
(Item No.

6). There had been distributed a memorandum from the Legal

Division dated March 27, 1964, attaching a draft report to the Bureau
of the Budget on a Treasury draft bill "To eliminate cumulative voting
of shares of stock in the election of directors of national banking
associations unless provided for in the articles of association."

The

5
3/31/64

-3-

proposed report would take the sane position, expressed by the Board
several times in testimony and reports on similar earlier proposals,
that the principle underlying cumulative voting, namely, permitting
substantial minority groups of shareholders to be represented on the
board of directors of a bank, is a sound one.
The report was approved unanimously; a copy is attached as
Item No.

6.

Question was raised whether it would be advisable to furnish a
copy of the report to the designated representative of the Secretary of
the Treasury in conformance with the spirit of the letter of March

3,

3_964, from the Secretary of the Treasury to the three Federal bank
supervisory agencies looking toward coordination of their policies.
It was noted that within the past week copies of reports on three
Pending bills had been furnished, as a matter of information, to the
designated representative of the Secretary and to representatives of the
other two bank supervisory agencies.

However, those were reports to

Congressional committees handling introduced legislation, whereas the
one on today's agenda was to be made to the Bureau of the Budget and
was on a Treasury draft bill.

The function of the Bureau in such a

case was to obtain comments, inform the originating agency, and attempt
to harmonize differing views.
During discussion comments were made by some of the Board members
that it was desirable to give every evidence of a sincere desire to cooperate with the coordination program, and there was general agreement

I07f;
3/31/64

-4-

that the present matter might appropriately be handled by an informal
inquiry of Treasury General Counsel Belin, the official who had been
designated by the Secretary of the Treasury as liaison with the bank
supervisory agencies, as to whether or not he wished to have a copy
of the Board's report on the draft bill regarding cumulative voting.
Secretary's Note: A copy of the letter to
the Budget Bureau was sent to Mr. Belin.
Comments on foreign operations applications.

Pursuant to the

discussion at the meeting on March 26, 1964, there had been distributed
a revised draft letter to the Comptroller of the Currency in reply to a
letter of February 26, 1.964, from Mr. A. J. Faulstich, his Administrative
Assistant.

Mr. Faulstich's letter, which referred to two letters in

which the Board invited comments by the Comptroller of the Currency on
applications of a corporation operating under the Board's Regulation K
and owned by a national bank for consent to acquire stock in two foreign
companies, indicated that such comments were not forthcoming because the
Comptroller did not have sufficient information on the proposals themselves or on the Board's policies and standards for consideration of such
applications.
Governor Daane indicated that he had not had an opportunity to
review the draft reply fully, and there was agreement that the matter
would be deferred for consideration tomorrow.

However, Governor

Balderston, who did not expect to be present at tomorrow's meeting, suggested certain revisions of the draft.

It was understood that these

3/31/64
suggestions, and certain others that were made, would be reflected in a
new draft.
Bank merger policy.

Mr. Shay referred to an inter-agency com-

mittee on which he and Mr. Leavitt were serving as the Board's
representatives, other members teing representatives of the Department
of Justice, the Treasury Department, the Comptroller of the Currency,
and the Federal Deposit Insurance Corporation.

The function of the

committee was to attempt to resolve differences or establish better
relationships between the work of the bank supervisory agencies in
administering the Bank Merger Act of 1960 and the responsibilities of
the Department of Justice in administering antitrust statutes.

An

Objective analysis of past merger decisions by the supervisory agencies
was contained in a research monograph prepared for the Board by Professor
George R. Hall of the University of Virginia and Professor Charles F.
Phillips, Jr., of Washington and Lee University.

The monograph had been

distributed with a memorandum dated March 20, 1964, from the Banking
Markets Unit, which recommended that the monograph be given rather wide
distribution and that the Board publish it in due course.

Mr. Shay

expressed the view that it would be useful to supply copies of the
monograph to the members of the inter-agency committee.
During discussion it was agreed that the memorandum from the
Banking Markets Unit would be docketed for tomorrow's meeting, at
Which time the Board could resolve the questions of distribution and
publication.

-6-

3/31/64

Governor Mills commented that the establishment of the interagency committee just mentioned, plus the machinery recently set up
for coordination of bank supervisory policies, sharpened his apprehension
that the practice of inter-agency consultations might spread to such a
point as inevitably to result in a watering down of Board opinions.
Sooner or later, as he saw it, one of the agencies consulted would
object to a stand the Board proposed to take.

If the Board would adhere

to its opinion, well and good, but if it modified that opinion in the
face of objection, the Congress or the public would have lost something
of the independence of the Board's thinking.
Governor Mills also stated that if the monograph on merger
actions should be considered at a time when he was not present, he
wished to put himself on record as being strongly in favor of giving it
Wide distribution.
The meeting then adjourned.
Secretary's Notes: Governor Shepardson today
approved on behalf of the Board a letter to
the Federal Reserve Bank of Cleveland (attached
Item No. 7) approving the designation of three
employees as special assistant examiners.
Pursuant to the requirement of section 10 of
the Federal Reserve Act, the Board's Annual
Report for 1963 was transmitted today to the
Speaker of the House of Representatives. A
copy of the Report was also transmitted to
the President of the Senate for the information
of the Senate.

( L,
Secret

io
TELEGRAM

Item No. 1
3/31/64

LEASED WIRE SERVICE

BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON

March 30, 1964.

CALVIN - SAN FRANCISCO
In view of tidal waves resulting in emergency conditions in Crescent
City, Californial the Board of Governors approves the operation in
temporary quarters of the Crescent City brandies of United California
Bank and Wells Fargo Bank.

(Signed)

Merritt Sherman

SHERMAN

10i()
BOARD OF GOVERNORS

Item No. 2
3/31/64

OF THE

FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD

March 31, 1964.

Board of Directors,
Five Point National
Bank of Miami,
Miami, Florida.
Gentlemen:
With reference to your request submitted through the Federal
Reserve Bank of Atlanta, the Board of Governors, acting under the provisions of Section 19 of the Federal Reserve Aet, grants permission
to the Five Point National Bank of Miami to maintain the same reserves
against deposits as are required to be maintained by nonreserve city
banks, effective with the first biweekly reserve computation period
beginning after the date of this letter.
Your attention is called to the fact that such permission
is subject to revocation by the Board of Governors.
Very truly yours,
(Signed) Merritt Sherman

Merritt Sherman,
Secretary.

11)61
BOARD OF GOVERNORS

Item No.

3

3/31/64

OF THE

FEDERAL RESERVE SYSTEM
:

WASHINGTON 25. D. C.

:..4•r,
.., 2

ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD

".
,.

.RAI. Roc,% ••

•••••••

March 31, 1964.

Mr. Eliot J. Swan, President,
Federal Reserve Bank of San Francisco,
94120
San Francisco, California
Dear Mr. Swan:
March 13) 1964, regarding the
This refers to your letter of
$5,400 incurred by the 'Lions First
penalties totaling approximately
on an average daily deficiency
National Bank, Salt Lake City, Utah,
31 weekly computation
of $171,000 in its reserves during 28 of the
1964.
)
26
February
periods from July 31, 1963, to
encies were discovered in
It is noted that (1) these defici
s with deposit reports;
report
ion
the semiannual comparison of condit
the bank inadvertently
1964,
26,
ry
Februa
(2) between July 31, 1963) and
pondent bank in
corres
a
of
t
deposi
of
had included time certificates
deposits for
of
s
report
its
on
the deduction item "Due from Banks"
t incorrect
preven
to
steps
taken
has
reserve purposes; (3) the bank
Bank that
your
of
n
opinio
the
is
it
reporting in the future; and (4)
and the
error
al
cleric
a
of
result
the
the improper classification was
certif—
time
the
if
es
reserv
te
member bank would have maintained adequa
ly.
proper
icates of deposit had been reported
In the circumstances) and in view of your recommendation, the
Board authorizes your Bank to waive the assessment of the penalties of
to February 26,
approximately $5,400 for the periods ended July 31, 1963,
1964.
Very truly yours,
(Signed) Merritt Sherman

Merritt Sherman,
Secretary.

1082
BOARD OF GOVERNORS

Item No.

4

3/31/64

OF THE

FEDERAL RESERVE SYSTEM
••

WASHINGTON 25. D. C.

•
iu •
I-- •

ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD

a4,44".••
aegtAL
March 31, 1964.

Mr. Joseph W. Barr, Chairman,
Federal Deposit Insurance Corporation,
Washington, D. C. 20429
Dear Mr. Barr:
Reference is made to your letter of March 18,
ing the application of the Greenfield State
concern
1964,
ield, California, for continuance of
Bakersf
Bank,
ce after withdrawal from membership in
insuran
deposit
System.
Reserve
Federal
the
No corrective programs which the Board of
Governors believes should be incorporated as conditions
to the continuance of deposit insurance have been urged
upon or agreed to by the bank.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.

1LW
BOARD OF GOVERNORS

Item No.

OF THE

5

3/31/64

FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD

March 311 1964.

Board of Directors,
Wells Fargo Bank,
San Francisco, California.
Gentlemen:
On October 15, 1963, the Board of Governors of
the Federal Reserve System approved the establishment of
a branch by Wells Fargo Bank in the vicinity of the intersection of Willow Pass Road, Taylor and Pacheco Boulevards,
Concord, California. Your letter of March 16, 1964, indicates that you now wish to change the location of this
ately
branch to the east side of Pacheco Boulevard, approxim
rd,
Bouleva
Taylor
and
Road
one-half mile north of Willow Pass
Pleasant Hill, California.
branch
The Board approves the establishment of this
by
approved
ly
previous
that
at the new location in lieu of
one
within
hed
establis
is
the Board, provided the branch
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 (8-1846), should be followed.)

Item No. 6

BOARD OF GOVERNORS

3/31/64

OF THE

FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDREBB OfFICIAL CORREMPONDENDE
TO THE BOARD

March 31, 1964.

Mr. Phillip S. Hughes,
Assistant Director
for Legislative Reference,
Bureau of the Budget,
Washington, D. C. 20503
Dear Mr. Hughes:
12, 1964,
This is in response to your request of March
bill
draft
ury
Treas
a
on
nors
Gover
of
for the views of the Board
stock in the election
"To eliminate cumulative voting of shares of
s provided for.
of directors of national banking associations unles
in the articles of association."
ns, which is
Cumulative voting for directors of corporatio
of States and by
provided for in the Constitutions of a number
principle that minority
statute in other States, is based on the
tion, on boards of
representation, or proportional representa
ative voting, minority sharedirectors is desirable. Through cumul
directors, whereas in
holders may be enabled to elect one or more
holders could
the absence of cumulative voting the majority share
ity which
minor
l
antia
subst
a
that
so
elect all the directors,
of view of
point
and
es
polici
the
might not be in agreement with
and
the majority could be prevented from presenting its views
a
ationi
corpor
the
of
tion
direc
otherwise participating in the
affairs.
g by shareholders
The provision regarding cumulative votin
for over .
of national banks has been a part of the Federal statutes
direct supervision of
thirty years, and while the Board has not had
the Currency,
the operation of the statute, as has the Comptroller of
ative
it is the Board's opinion that the principle underlying cumul
=
of
s
share
group
ity
minor
l
antia
subst
voting - namely, permitting
nd
is
a'sou
tors
direc
of
board
the
holders to be represented on

L RESERVE SYSTEM
BOARD OF GOVERNORS OF THE FEDERA

Mr. Phillip S. Hughes

-2-

te should not be
one. Accordingly, the Board feels that the statu
d that
lishe
is
it
estab
unless
amended in the manner proposed
repeal
that
e
orabl
so
unfav
been
results in actual operation have
able.
of the provision is clearly advis
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.

O81.,
Item No. 7

BOARD OF GOVERNORS

3/31/64

OF THE

FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
CE
ADDRESS OFFICIAL CORRESPONDEN
TO THE BOARD

April 1, 1964.

Vice President,
Mr. H. W. Huning, Assistant
veland,
Federal Reserve Bank of Cle
Cleveland, Ohio. 44101
Dear Mr. Huning:
contained in
In accordance with the request
roves the
app
the Board
your letter of March 26, 1964,
ant
ist
cial ass
designation of Robert Groh as a spe
d for
elan
Bank of Clev
examiner for the Federal Reserve
te
Sta
of
examinations
the purpose of participating in
member banks.
ignation of
The Board also approves the des
cial assistant examiners
the following employees as spe
of Cleveland for the purpose
for the Federal Reserve Bank
ions of State member banks
of participating in examinat
ir names:
except those listed opposite the
Trust Company,
Robert R. Puthoff - The Central
o
Ohi
i,
Cincinnat
n Trust Company,
Charles Beck - The Fifth Third Unio
o
Cincinnati, Ohi
- The Central Trust Company,
Cincinnati, Ohio
en your bank to designate
The authorizations heretofore giv
assistant examiners are
these individuals as special
hereby canceled.
been made on our
Appropriate notations have
deleted from the list of
records of the names to be
special assistant examiners.
Very truly yours,
(Signed) Karl E. Bakke

Karl E. Bakke,
Assistant Secretary.