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161 Minutes for To: Members of the Board From: Office of the Secretary May 16, 1962. 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 °ay that you have seen the minutes. Chm. Martin Gov. Mills Gov. Robertson Gov. Balderston Gov. Shepardson Gov. King Gov. Mitchell Minutes of the Board of Governors of the Federal Reserve System °n Wednesday, May 16, 1962. PRESENT: Mr. Mr. Mr. Mr. The Board met in the Board Room at 10:00 a.m. Balderston, Vice Chairman Mills King Mitchell Sherman, Secretary Kenyon, Assistant Secretary Molony, Assistant to the Board Fauver, Assistant to the Board Hackley, General Counsel Solomon, Director, Division of Examinations Mr. Hooff, Assistant General Counsel Mr. Leavitt, Assistant Director, Division of Examinations Mr. Mr. Mr. Mr. Mr. Mr. Circulated items. The following items, which had been circulated to the Board and copies of which are attached to these minutes under the respective item numbers indicated, were approved unanimously: Item No. Lett n, -er to New Jersey Bank and Trust Company, 0,ttOfl, New Jersey, approving the establishment a branch on McBride Avenue between Lackawanna 0*enue and Radcliffe Avenue, West Faterson, branch ' erations at 1005 McBride Avenue to be discontinued L'ztataneously with the establishment of the new ul'ahch. 1 Lett:-er to The Middle Tennessee Bank, Columbia, T ees nessee, approving an extension of time to 0 elplish a branch in the Columbia Plaza Shopping eriter on West 7th Street. 2 Let eapr to Wells Fargo Bank, San Francisco, lfornia approving an extension of time to ' establish a branch in Vallejo. 3 j 5/16/62 -2Report on competitive factors (Wheeling) West Virginia). There ilaciteen distributed a draft of report to the Comptroller of the of ellll'enty on the competitive factors involved in the proposed merger Seellrity Trust Company, Wheeling, West Virginia, into The National Bank °1-West Virginia at Wheeling, Wheeling, West Virginia. The conclusion, 48 drafted, stated that consummation of the proposed merger would -u-Lnate a substantial amount of competition existing between two banks of nearly eval size and located within two city blocks of each *ter; that the merger might increase competition with the largest bank Ilathe city but would probably have an adverse effect on the remaining small bank in downtown Wheeling. y Governor Mills expressed the view that the size of the communit 414 the character of economic activity would justify a reasonable number "larger banks, such as the bank that would result from the proposed illetger. On the basis of this reasoning, he felt that the tone of the t1411,1 part of the conclusion was severe. Accordingly, he suggested bank el4Inging the final part of the conclusion to state that the more l'esillting from the merger would be in a position to compete t "tectively with the largest bank in the city than the two componen downtown Wheeling itstautions; and that the remaining small bank in 143111a be in a less favorable competitive status. that he In further discussion, Governor Mitchell indicated lic)441 prefer to leave the conclusion as originally drafted. He did not 5/16/62 -3- believe that an increase in size such as would result from the proposed 41erger meant that a bank was better able to serve the community, and the Proposed merger would eliminate a substantial amount of competition between two existing banks. He questioned the reasoning of the Pederal Reserve Bank of Cleveland, which had concluded that "there are 11° foreseeable adverse competitive effects from the merger and competition between the resulting bank and the largest bank in the area for larger b°rrowers may well be stimulated." The Reserve Bank had also stated that "the public would lose one banking office but since the office of 44tional is so close to that of Security, the public would not be inconvenienced." Mr. Leavitt reported that Governor Shepardson had talked with hm about this matter and had suggested that the conclusion of the r.e/)°It might be revised as follows: Consummation of the proposed merger would eliminate a substantial amount of competition existing between two banks of nearly equal size and located within two city blocks of each other. While the merger might have an adverse effect on the remaining smaller bank in downtown Wheeling, it would probably increase competition for the largest bank in the city. Governors Balderston, Mills, and King indicated that they would be Si satisfied with the language that had been suggested by Governor lardson. Accordingly, the report was approved for transmittal to the ConTh4. --'roller with the conclusion reading in that manner. It was 5/16/62 —4— lInderstood that Governor Mitchell, for reasons he had stated, would have Preferred the conclusion as origin.11y drafted. Report on ‘competitive factors (Cyril, Oklahoma). aistributed There had been a draft of report to the Federal Deposit Insurance Corporation °Tithe competitive factors involved in the proposed acquisition of 4sset5 and assumption of liabilities of The Bank of Cyril, Cyril, °Ic-4110ma, by the Cyril State Bank, Cyril, Oklahoma, a proposed new 13ank• The conclusion read as follows: The acquisition of assets and assumption of liabilities Of The Bank of Cyril, Cyril, Oklahoma, by the Cyril State Bank, Cyril, Oklahoma, would have no effect upon competition. There being no objection, the report was approved unanimously t°r transmittal to the Corporation. Regulation I (Item No. 4). There had been distributed a niclrandum from the Legal Division dated May 10, 1962, presenting a 131s(43osed revision of Regulation I, Increase or Decrease of Capital Stc)ck of Federal Reserve Banks and Cancellation of Old and Issue of tock Certificates. The Regulation had been revised to conform to the Style of the Code of Federal Regulations. Relatively few other hallges had been made, the amendments principally reflecting changes them law since the Regulation was previously issued. It was suggested that the draft revision be sent to all Federal Reserve Banks with a l'egtlest for comments and suggestions by July 1, 1962. 5/16/62 -5Following comments by Mr. Hooff and Mr. Hackley, the proposal t° send the draft of revised Regulation to the Reserve Banks for comment unanimously. 15 %las _,Tprcved as Item No. A copy of the transmittal letter is attached 4. With respect to a question whether a copy of the draft 1114Naation should be sent to the Comptroller of the Currency for comment View of the provisions therein relating to national banks, it was e'E reed that this step should await the receipt of comments from the lieserve Banks. Messrs. Hooff and Leavitt then withdrew. Buffalo Branch director. On Monday, May 14, the Board was intorted of a question raised by the Federal Reserve Bank of New York 4sto whether there would be objection if Raymond E. Olson, Chairman °t the Board of the Buffalo Branch, who would have completed six years' "lee as a branch director at the end of 1962, were to accept in the I future an offer to become a director of the Lincoln Rochester llea"' Company, Rochester, New York. As requested at the May 14 meeting, thelle had now been distributed a memorandum from Mr. Sherman, dated ay 1 '5, presenting information regarding cases over about the past cleeMe in which branch directors had raised with the Board the question or -ecePting commercial b k directorships while serving at the sane te as branch directors. The memorandum pointed out that on November 3.960, the Board concluded against amending its Regulations relating to 111144(0, " e8 of Federal Reserve Banks so as to preclude branch directors 7, 5/16/62 -6- tl'°D1 serving at the same time as commercial bank directors. The RegUlations provided that Board-appointed branch directors "shall be Pel'sans who are actively engaged in commerce, agriculture, some other industrial pursuit, or the practice of a profession, who are not 1111-Marily engaged in banking and preferably are not directors of banks, "LoUgh they may be stockholders." Governor Balderston said he had been informed by Governor 811eTard50n that the latter, after reading the May 15 memorandum, e°ncluded that a question of consistency was involved and therefore 1101114 be inclined not to interpose objection to Mr. Olson's continuing 111141 the end of this year as a Buffalo Branch director should he become 4411sector of the member bank in Rochester. Governor Mills stated that, since Morgan New York State Corporation 44 now indicated that it did not propose to contest through legal action tbe Board's adverse decision on its application for the formation of a 1184* holding company, one of the subsidiary banks of which would have been Lincoln Rochester Trust Company, he would not object to Mr. Olson's Co lluing as a Buffalo Branch director for the remainder of this year "haugh Mr. Olson became a director of Lincoln Rochester. Governor Mth_ 5 expressed the view that each case of this kind should be studied similar cases °Ilit8 awn merits; that the Board's attitude on somewhat Illthe past should not necessarily be controlling. 5/16/62 -7Governor King expressed the view that it would be better if the &I-rector made his own decision in a case of this kind. The question 114311/1€ been raised, however, he would be inclined to interpose no chiection in this instance. Governor Mitchell likewise expressed the view that no objection should be interposed in this case. He noted, however, that three other eases of this kind had arisen at the Buffalo Branch since 1949. This " 4.1.1t suggest discussing the situation with the New York Reserve Bank, 1 Thith a view to having the manAgement of the Bank and the Buffalo Branch Inacie aware that if a branch director wished to become a director of a ecit°1eroial bauk he would ordinarily be expected to resign as a branch ttirector. Governor Balderston indicated that he would not be inclined to 114e/1308e objection in this instance. Accordingly, it was understood that the New York Reserve Bank 11°11-1-dbe advised informally by the Secretary that the Board, after cons idering the question raised by Mr. Olson, would not interpose °I5jettion to his continuing as a director of the Buffalo Branch for the remainder of 1962 should he become a director of Lincoln Rochester Net company. ' There followed a brief discussion with regard to whether 111114.,_ -"uer consideration should be given to changing the pertinent Provi slons of the Board's Regulations relating to Branches of Federal 5/16/62 -8- Ileserve Banks. It was pointed out that this question had been discussed bY the Board at least twice within the past decade, most recently in the latter part of 1960, as indicated in Mr. Sherman's memorandum. One cesrament made at that time was to the effect that the difficulty in *telning persons of the caliber sought as branch directors might be turther increased if the possibility of service as a director of a commercial bank was flatly prohibited. There was also general discussion of the functions of the directors of Reserve Bank branches and means that might be utilized for Illaking such service more 'warding, both to the directors and to the 41era1 Reserve System. Reference was made to certain informal sub, -1Nsestions that had been advanced recently by Chairman Hall of the ?ecierea Reserve Bank of Cleveland, and it was noted that the subject kliat be ot appropriate for discussion at the next meeting of the Conference Chairmen of the Federal Reserve Banks. The meeting then adjourned. CI- BOARD OF GOVERNORS 00****4 WO010, OF THE Item No. 1 5/16/62 FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. 1 4 ADDRESS orriatAL TO THE CORRESPONDENCE BOARD 44** May 16, 1962. Board of Directors, New Jersey Bank and Trust Company) Clifton, New Jersey. Gentlemen: The Board of Governors of the Federal Reserve System approves the establishment of a branch by New Jersey Bank and Trust Company, Clifton) New Jersey, on McBride Avenue between Lackawanna Avenue and Radcliffe Avenue, West Paterson, New Jersey) provided the branch is established within one year from the date of this letter, and Provided further that branch operations now conducted at 1005 McBride Avenue, West Paterson, are discontinued simultaneously with the establishment of the above branch. Very truly yours) (Signed)Elizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary. BOARD OF GOVERNORS 40444*4 4 OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, 0„ C. Item No. 2 5/16/62 A 0RESS t3PFtCIAL cDRACRPONOIENCE 0 Mt 130AR0 May 16, 1962. Board of Directors, The Middle Tennessee Bank, Columbia, Tennessee. Gentlemen: The Board of Governors of the Federal Reserve System extends the time within which The Niddle Tennessee Bank may establish a branch in the Columbia Plaza Shopping Center on West 7th Street, Columbia, Tennessee, to September 6$ 1962, under the authorization contained in the Board's letter of November 6, 1961. Very truly yours, (Signed) Elizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary. 1847 BOARD OF GOVERNORS Ai te 1,001,444 OF THE Item No. FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. 4 4 1)* ADDRESS 414 arricim. CORRESPONDENCE TO THE ODARD Nt:/tRISt 04444* May 16, 1962. Board of Directors, Wells Fargo Bank, San Francisco, California. Gentlemen: The Board of Governors of the Federal Reserve BYetem extends to July 210 1962, the time within which Wells Fargo Bank may establish a branch at 1702 Tennessee Avenue, Vallejo, Solano County, California. Very truly yours, (Signed) Elizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary. 3 5/16/62 • tr BOARD OF GOVERNORS oittov **** OF THE FEDERAL RESERVE SYSTEM Item No. 5/16/62 WASHINGTON 25, O. C. ADDRESS OFFICIAL CORRESPEINDE TO THE BOARD IttSt ,t,"4 44*** May 16, 1962. De There are enclosed three copies of a proposed revision of the /3 Qard i s Regulation I dealing with the issuance and cancellatim mertio'-ces of capital stock of Federal Reserve Banks, together with a poser rlandura containing information on the purpose of the various pro' f th 8 4nendments. The Board would appreciate receiving the comments and, reiri ( ‘,Kgestions of your Bank by July 1, 1962, before notice o e 81°11 is published in the Federal Register for public comments. Very truly yours, Merritt S Secret TAiciosures 111E PRESIDENTS OF ALL FEDERAL RESERVE BANKS CE
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