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Minutes for
To:
Members of the Board
From:
Office Of the Secretary
May
6, 1963
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. King
Gov. Mitchell
t4.641 -
Minutes of the Board of Governors of the Federal Reserve
System on Monday, May 6, 1963. The Board met in the Board Room
at 10:00 a.m.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
Martin, Chairman
Balderston, Vice Chairman
Mills
Robertson
Shepardson
Mr. Sherman, Secretary
Mr. Kenyon, Assistant Secretary
Mr. Young, Adviser to the Board and Director,
Division of International Finance
Mr. Fauver, Assistant to the Board
Mrs. Semia, Technical Assistant, Office of the
Secretary
Messrs. Noyes, Koch, Brill, Garfield, Holland,
Williams, Dembitz, Solomon, Altmann, Broida,
Eckert, Fisher, Partee, Weiner, Wernick, and
Yager of the Division of Research and Statistics
Messrs. Furth, Hersey, Sammons, Emery, Gekker,
Gemmill, Klein, Nettles, and Reynolds of the
Division of International Finance
Economic review.
The staff of the Division of International
Finance commented on international financial conditions, with special
Canada,
reference to the U. S. balance of payments and developments in
the United Kingdom, and European countries, after which the staff of the
to the
Division of Research and Statistics presented information relating
domestic economy, particularly in regard to prices, production, labor
markets, business spending plans, real estate and construction, consumer
credit, and capital markets.
All members of the staff then withdrew except Messrs. Sherman,
Kenyon, Young, Fauver, and Noyes, and Mrs. Semia, and the following
entered the room:
I71;
5/6/63
-2Mr. Hackley, General Counsel
Mr. Solomon, Director, Division of Examinations
Mr. O'Connell, Assistant General Counsel
Mr. Shay, Assistant General Counsel
Mr. Hooff, Assistant General Counsel
Mr. Leavitt, Assistant Director, Division of Examinations
Mr. Thompson, Assistant Director, Division of Examinations
Mr. Bakke, Senior Attorney, Legal Division
Miss Hart, Senior Attorney, Legal Division
Mr. Poundstone, Review Examiner, Division of Examinations
Circulated or distributed 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 the Federal Deposit Insurance Corporation
regarding a revised form for requesting copies of
reports of examination and other information for
inter-agency use.
1
Letter to The Manistee County Savings Bank, Manistee,
Michigan, granting its request for permission to
exercise fiduciary powers.
2
Letter to Hawthorne Bank of Wheaton, Wheaton, Illinois,
granting its request for permission to exercise fiduciary
Powers.
3
Letter to The Farmers and Merchants Bank of Hill City,
Hill City, Kansas, granting its request for permission
to exercise fiduciary powers.
14-
Letter to the Federal Reserve Bank of Dallas regarding
the status as a holding company affiliate of The Sealy &
Smith Foundation for The John Sealy Hospital, Galveston,
Texas.
5
Letter to Bank of America National Trust and Savings
Association, San Francisco, California, approving the
establishment of a branch in Madrid, Spain.
6
5/6/63
_ 3_
Item No.
Letter to The Fifth Third Union Trust Company,
Cincinnati, Ohio, approving the establishment
Of a branch in Kenwood, Hamilton County.
7
Lettar to Wachovia Bank and Trust Company,
Winston-Salem, North Carolina, approving the
establishment of a branch on U. S. Highway 70
at the intersection of Lynnstone Court in
Asheville.
8
Letter to Wachovia Bank and Trust Company,
Winston-Salem, North Carolina, approving the
establishment of a branch on Corporation
Parkway.
9
Letter to Bank of Las Vegas, Las Vegas, Nevada,
approving the establishment of a branch near
the intersection of Riviera Road and Las Vegas
Boulevard, Clark County.
10
Letter to Bank of Las Vegas, Las Vegas, Nevada,
11
approving the establishment of a branch near
the intersection of East Fremont Street and
East Charleston Boulevard, adjacent to Las Vegas.
Letter to Fidelity Bank, Beverly Hills,
C51ifornia, approving the establishment of a
branch on Venice Boulevard, Los Angeles.
12
Letter to the Federal Reserve Bank of Richmond
regarding a possible violation of section
6(a)(2) of the Bank Holding Company Act by
The Bank of Virginia, Richmond, Virginia.
13
Letter to Mr. Harrison F. Houghton, Senior
Economist, House Committee on Banking and
Currency, furnishing unpublished information
regarding shares of Baystate Corporation,
Boston, Massachusetts, held directly or
Indirectly by The First National Bank of
Boston, Boston, Massachusetts, in a fiduciary
capacity.
5/6/63
Item No. 13, in the form approved by the Board, reflected
minor editorial changes agreed upon during discussion.
Administrative Conference of the United States (Item No.
15).
There had been distributed a memorandum dated May 1, 1963, from the
Legal Division in connection with a request from the Bureau of the
Budget for the Board's views on a draft bill to establish a permanent
Administrative Conference of the United States.
In 1961 the President
established, by Executive Order, an Administrative Conference of the
United States, the purpose of which was to study the Federal administrative process and report to him not later than December 31, 1962,
its recommendations for improvements.
In response to a request from
the Bureau of the Budget, the Board in a letter dated April 15, 1963,
commented on the recommendations of the Conference.
The Executive Order also called upon the Conference to submit
suggestions for appropriate means to be employed in the future for
improving the processes of administrative agencies.
In this connection,
the Conference recommended that it be continued on a permanent basis
to provide a forum in which the Federal agencies might cooperatively,
continously, and critically examine their administrative processes
and related organizational problems.
To implement that recommendation,
the Bureau of the Budget had prepared draft legislation, on which the
Board was now asked to comment.
5/6/63
-5The memorandum described the structure and authority provided
for the Conference in the draft bill, the history and efficacy of
similar efforts in the past, and the merits of the current proposal.
The Legal Division concludea tho.t the proposed legislation was sound
in principle and warranted favorable consideration, except for two
features of the draft bill which were believed to deserve adverse
comment.
Attached to the memorandum was a draft of reply to the Bureau
Of the Budget stating that the Board agreed in principle with the
objectives sought to be accomplished by the bill and, except for the
two provisions deemed objectionable, favored the proposed legislation.
After comments by Messrs. Hackley and Bakke based on the Legal
Division's memorandum, Governor Mills expressed reservations as to the
Proposed legislation.
He had an uncomfortable feeling that the Confer-
ence would develop into just another study group watching over the
activities of Government supervisory agencies and handing down dictates
as to procedures that would impede their independent thinking.
Since
the Congress had power to revamp any agency as it saw fit, Governor
Mills wondered if there was any real need to subject Government agencies
to the desiccating judgments of an outside body.
Mr. Hackley observed that proponents of the legislation argued that
ad hoc investigations were likely to be made and forgotten, whereas a
continuing study group like the Administrative Conference would provide
a balanced viewpoint, taking into account not only the views of Government
ISo
5/6/63
-6-
agencies but also those of the parties being regulated.
He noted that
the recommendations made by the Conference would not be binding upon
Federal agencies, to which Mr. Bakke added that under the terms of the
bill the jurisdiction of the Conference would specifically stop short
Of policy matters and areas of agency judgment.
Governor Robertson commented that administrative law was a field
that had developed significantly in the past
35 to 40 years; in his view
there was a need to develop uniform procedures such as had been developed
for judicial law and to bring into play the best thinking available.
In further discussion Chairman Martin suggested omitting the last
Paragraph of the draft, which reiterated that the Board favored the proposed
legislation and wished to express its support thereof.
Governor Mills indicated that he would favor this suggestion,
adding that he realized that his concern looked rather far into the
future.
It was based on his observations as to the gradual assumption
Of power on the part of newly-created agencies that at the outset were
intended to fill relatively minor positions within the Governmental
establishment.
The letter was then approved unanimously with the understanding
that the last paragraph of the draft would be omitted.
A copy of the
letter in the form in which it was sent to the Bureau of the Budget is
attached as Item No. 15.
Mr. Bakke then withdrew from the meeting and Mr. Cardon, Legislative Counsel, entered the room.
5/6/63
-7Federal Deposit and Savings Insurance Board (Item No. 16).
At
its meeting on May 3, 1963, the Board discussed the fact that testimony
was to be given by several of its members before the Subcommittee on
Bank Supervision and Insurance of the House Banking and Currency Committee
on May
8 at hearings on two pending bills. It was agreed that a position
might be taken by the Board as a whole, in the form of a letter to the
Subcommittee, in regard to H.R. 729, a bill to establish a Federal Deposit
and Savings Insurance Board, leaving the Board members free to restrict
their individual comments at the hearing to H.R. 5874, a bill to establish
a Federal Banking Commission.
Accordingly, there had been distributed
a draft of letter to Congressman Multer, Chairman of the Subcommittee, in
which a view adverse to H.R. 729 was expressed.
During discussion it was suggested that the last paragraph of the
draft letter, concerning the effect of a particular section of the bill,
be deleted, thus leaving the Board in the posture of opposing the proposed
legislation in entirety.
The letter was then approved unanimously with the understanding
that the last paragraph of the draft would be omitted.
A copy of the
letter in the form in which it was sent to Chairman Multer is attached
as Item No. 16.
Messrs. Young, Cardon, and Noyes, and Miss Hart then withdrew from
the meeting .
Interpretation of banking laws and regulations (Item No. 17).
On
April 30, 1963, the Board approved a draft of letter to the Comptroller
4‘_I
5/6/63
-8-
of the Currency regarding the Board's right to interpret provisions of
the national banking laws and regulations of the Comptroller in their
application to State member banks.
The draft also discussed and reaf-
firmed the Board's ruling that deposits of Associated Hospital Service
would not qualify as savings deposits under Regulation Q, Payment of
Interest on Deposits.
There had now been distributed a memorandum dated May 2, 1963,
in which Mr. Hackley observed that a provision of section 2 of the Federal
Reserve Act that had not been mentioned in the draft letter appeared to
have a bearing on the right of the Board to interpret its awn regulations
and to enforce them in the case of a national bank.
Section 2 provides
that, if a national bank fails to comply with any of the provisions of
the Federal Reserve Act, its franchises under the National Bank Act "shall
be thereby forfeited."
It further provides that any such noncompliance
by a national bank shall be determined by a court of the United States
in a suit brought for that purpose "under direction of the Board of
er of the Currency."
Governors of the Federal Reserve System, by the Comptroll
This provision seemed to evidence the intent of Congress that, if it
Federal Reserve
appeared to the Board that a national bank had violated the
Act, the
proceedings
Board might direct the Comptroller to institute court
to determine whether there had been such a violation.
Reserves of
The memorandum also pointed out that Regulation D,
disregard
Member Banks, provides that, if a member bank continues to
eib
,
5/6/63
-9-
reserve requirements, the Reserve Bank of the district shall recommend
whether the Board should, "in the case of a national bank, direct the
Comptroller of the Currency to bring suit to forfeit the charter of
sUch national bank pursuant to section 2 of the Federal Reserve Act."
The draft of letter approved on April 30 stated that the Board
must necessarily interpret any provisions of Federal banking laws and
regulations that were applicable to State member banks; and the implication
was that the Comptroller must do the same with respect to provisions of
law and regulations applicable to national banks.
The draft also stated
that an agency's interpretations of its own regulations should be given
"persuasive weight unless they seem clearly erroneous." It was not
believed that the provisions of section 2 of the Federal Reserve Act
were inconsistent with these statements.
However, it did appear that
the section 2 provisions presented an additional important consideration
with respect to interpretations of the Federal Reserve Act insofar as
they applied to national banks.
Attached to the memorandum were alternative
revisions of the April 30 draft letter.
After discussion, the letter was approved unanimously in a revised
form incorporating the second alternative suggested by Mr. Hackley.
A
copy of the letter in the form in which it was sent to the Comptroller
Of the Currency is attached as Item No. 17.
Date of hearing.
Mr. Sherman reported that the mandatory hearing
under section 4(0(6) of the Bank Holding Company Act that the Board had
4
5/6/63
-10-
ordered on April 29, 1963, to be held in Minneapolis on May 15, 1963,
in the matter of The Otto Bremer Company was being continued to June 13,
1963, by Hearing Examiner Schneider.
All members of the staff then withdrew except Messrs. Sherman,
Kenyon, and Fauver.
Director appointment.
After discussion, it was agreed to ascertain
through the Chairman of the Federal Reserve Bank of Boston whether Mr.
Fred C. Tanner, President and General Manager of Federal Products Corporation, Providence, Rhode Island, would accept appointment, if tendered,
as Class C director of the Bank for the unexpired portion of the term
ending December 31, 1965, to succeed Mr. Wilbur H. Norton, deceased;
with the understanding that the appointment would be made if it were
ascertained that Mr. Tanner was available.
The meeting then adjourned.
Secretary's Notes: Pursuant to recommendations
contained in memoranda from appropriate individuals
concerned, Governor Shepardson today approved on
behalf of the Board the following actions relating
to the Board's staff:
: increapes, effective May 12, 1963
.§212
.Ey
Loree D. Bernard, Statistical Clerk, Division of Research and
Statistics, from $4,110 to $4,250 per annum.
J. Cortland G. Peret, Economist, Division of Research and Statistics,
from $11,150 to $11,515 per annum.
James R. Smith, Review Examiner, Division of Examinations, from
$8,045 to $8,310 per annum.
Ann W. Raybold, Employment Technician, Division of Personnel
Administration, from $5,205 to $5,375 per annum.
C)
5/6/63
Transfer
Daisy L. Condon, from the position of Secretary in the Division of
Ilank Operations to the position of Secretary in the Division of Data
Processing, with no change in basic annual salary at the rate of $5,715,
effective the date of assuming her new duties.
Governor Shepardson also approved today on
behalf of the Board a memorandum dated May 2,
1963, from Mr. Johnson, Director of the
Division of Personnel Administration, noting
that the appointment of Dale K. Osborne as
Economist in the Division of Data Processing,
approved by the Board on March 28, 1963, was
with the understanding that the Board would
pay his moving expenses, transportation and
per diem for him, and transportation for his
family to Washington, D. C. This action did
not infer a general relaxation of the Board's
policy of not paying such expenses except in
the case of a person transferring from a Federal
Reserve Bank to the Board.
1
BOARD OF GOVERNORS
Item No. 1
5/6/63
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
May
6, 1963
Federal Deposit Insurance Corporation,
National Press Building,
Washington 25, D. C.
Gentlemen:
Referring to Mx. Edward H. DeHority's letter of April 15,
1963, and to Mr. John F. Lord's letter of April 19, 1963, there is
enclosed a copy of Form FR 272 which has been revised to include a
statement similar to that included in your Form DE-5. These forms
are receipts submitted in requesting copies of Reports of Examination and other information for inter-agency use.
As indicated in Mr. Lord's letter, it is understood and
agreed that while it is intended that the language of the statement
Prevent the disclosure or publication of the actual Report or any
Pages thereof, or the identification of the source of any information obtained therefrom, it is not intended to prohibit:
The use of any information, without disclosure of source,
in proceedings affecting the particular subject bank.
The use of any information for publication, so combined
with other information from two or more banks other than
the subject bank so as to prevent identification of the
subject bank.
In addition, the Boarc will be happy to consider any
Specific request for the use of an Examination Report, any portion
thereof, or information furnished therefrom, where prior consent
is requested on behalf of the Federal Deposit Insurance Corporation.
Very truly yours,
(Signed) Merritt Sherman
Enclosure
Merritt Sherman,
Secretary.
, pa
= 4,27z
're 4-63
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
Date
(Date of Report)
ll'else furnish us the latest report of:
41Ination5 (Including Trust Department)
Co
ndition
0.1111.111MIN
4.•••••010
Income and Dividends
4' the following bank:
We agree that the above report of examination and other information fur—
Us shall remain the property of the Federal Deposit Insurance Corporation
Pecierder no circumstances will any official of the Board of Governors of the
iltrit.441 Reserve System disclose or make public in any manner such report or any
4-°11 thereof or other information so furnished.
Records Section
FDIC USE
BOARD USE
r:
-vort
liort
Return. Acknowledged:
Received:
By:
Returned:
Date:
Ili
sition Returned:
1188
Item No. 2
5/6/63
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
May
6, 1963
Board of Directors,
The Manistee County Savings Bank,
Manistee, Michigan.
Gentlemen:
This refers to your request for permission, under
aPplicable provisions of your condition of membership numbered
1, to exercise fiduciary, powers.
Following consideration of the information submitted,
the Board of Governors of the Federal Reserve System grants
The Manistee County Savings Bank permission to exercise any
and all fiduciary powers now or hereafter conferred upon such
bank by or pursuant to the laws of the State of Michigan.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
,484: 7
1
Item No.
BOARD OF GOVERNORS
3
5/6/63
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
May
6, 1963
Board of Directors,
Hawthorne Bank of Wheaton,
Wheaton, Illinois.
Gentlemen:
This refers to your request for permission,
under applicable provisions of your condition of membership numbered 1, to exercise fiduciary powers.
Following consideration of the information submitted, the Board of Governors of the Federal Reserve System
grants Hawthorne Bank of Wheaton permission to exercise
any and all fiduciary powers now or hereafter conferred upon
Illinois.
such bank by or pursuant to the laws of the State of
Very truly yours,
(signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
91)
Item No. I.
5/6/63
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
May
6, 1963
Board of Directors,
The Farmers and Merchants Bank of Hill City,
Hill City., Kansas.
Gentlemen:
This refers to your request for permission, under
aPplicable provisions of your condition of membership numbered
1, to act in certain fiduciary capacities.
Following consideration of the information submitted,
the Board of Governors of the Federal Reserve System grants
permission to The Farmers and Merchants Bank of Hill City,
to act as executor, administrator, and guardian of estates,
With the understanding that your bank will not accept fiduciary
appointments of other kinds without first obtaining the permission of the Board.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
BOARD OF GOVERNORS
.••••••.
Item No.
OF THE
/A•
FEDERAL RESERVE SYSTEM
tts\
e
5
5/6/63
.•
t*
,1
.r.
et, 1 1 1 i t.
-'4).•VSel*
•
IQ •
i--•
ti•
.' .
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
•ittit REA •
•••••••
May
6, 1963
Mr. Thomas R. Sullivan, Vice President,
Federal Reserve Bank of Dallas,
Dallas 2, Texas.
Dear Mr. Sullivan:
This refers to your letter of April 291 1963, requesting
that you be advised whether there is any change in the status of
The Sealy & Smith Foundation for The John Sealy Hospital (nFounda.1,7°n") as a holding company affiliate and its right to vote the
sl,00k it owns of First Hutchings-Sealy National Bank of Galveston.
At the time of the April 26, 1940, determination that
undation was not a holding company affiliate (except for the
PurPoses of Section 23A of the Federal Reserve Act) with respect
w the First National Bank of Galveston, Foundation owned 52 per
cent of the outstanding shares of that bank and approximately 16
per cent of the outstanding shares of Hutchings-Sealy National
46ank of Galveston. In 1958 the aforementioned two banks consolidated under the charter of The First National Bank of Galveston
and under the title of First Hutchings-Sealy National Bank of
Qalveston.
PO
On the basis of information currently submitted, it
al?pears that there has been no substantial change in the factual
s
jtuation. Consequently, since the Boardls previous determina1°11 was made with respect to the surviving bank in the aforeInentioned consolidation, it is the opinion of the Board that no
redetermination is necessary and the 1940 determination remains
force and in effect.
Please advise Foundation accordingly. Since correspondlice submitted by First Hutchings-Sealy National Bank indicates
!
!'lle current request was initiated as a result of an examination,
the bank might also appreciate similar advice in order to be in
4 POSitiOn to apprise the examiners as to the status of the determ
ination.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
°1.
Item No. 6
5/6/63
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
May
6, 1963
Bank of America National Trust
and Savings Association,
San Francisco 20, California.
Gentlemen;
The Board of Governors of the Federal Reserve
System authorizes Bank of America National Trust and
Savings Association, San Francisco, California, pursuant
to the provisions of Section 25 of the Federal Reserve Act,
to establish a branch in the City of Madrid, Spain;
and to
operate and maintain such branch subject to the provisions
of such Section.
Unless the branch is actually established and
Opened for business on or before May 1, 1964, all rights
granted hereby shall be deemed to have been abandoned and the
authority hereby granted will automatically terminate on that
date.
Please advise the Board of Governors, in writing,
through the Federal Reserve Bank of San Francisco, when the
branch is opened for business, furnishing information as to
the exact location of the branch.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
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 prescrib
ed in the Board's letter
Of November 9, 1962 (S-1846), should be followed
.)
Item No.
7
5/6/63
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE HOARD
May 6, 1963
Board of Directors,
The Fifth Third Union Trust Company,
Cincinnati, Ohio.
Gentlemen:
The Board of Governors of the Federal
Reserve System approves the establishment of a
branch by The Fifth Third Union Trust Company in
the Kenwood Plaza Shopping Center located at the
intersection of Kenwood and Montgomery Roads in
an unincorporated area known as Kenwood, Hamilton
County, Ohio, provided the branch is established
within one year from the date of this letter.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
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.)
91
BOARD OF GOVERNORS
Item No.
OF THE
tie •
0%
sr%
8
5/6/63
•••••••
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
w•
•
(-1 •
(-k•
1'" •
'
,
L•
itAL R.SccS
* •.
••
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
May
6, 1963
Board of Directors,
Wachovia Bank and Trust Company,
Winston-Salem, North Carolina.
Gentlemen:
The Board of Governors of the Federal Reserve
System approves the establishment of a branch by Wachovia
Bank and Trust Company on U. S. Highway 70 at the
intersection of Lynnstone Court in Asheville, North
one
Carolina, provided the branch is established within
year from the date of this letter.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
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-l846), should be
followed.)
BOARD OF GOVERNORS
Item No.
9
5/6/63
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
May
6, 1963
Board of Directors,
Wachovia Bank and Trust Company,
Winston-Salem, North Carolina.
Gentlemen:
The Board of Governors of the Federal Reserve
System approves the establishment of a branch by Wachovia
Bank and Trust Company on Corporation Parkway near the
intersection of Buchanan Street in Winston-Salem, North
Carolina, provided the branch is established within one
Year from the date of this letter.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
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.)
1 191;
Item No. 10
5/6/63
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
May
6, 1963
Board of Directors,
Bank of Las Vegas,
Las Vegas, Nevada.
Gentlemen:
The Board of Governors of the Federal Reserve
System approves the establishment of a branch by Bank
of Las Vegas in the vicinity of the intersection of
Riviera Road and Las Vegas Boulevard in an unincorporated
section of Clark County, Nevada, provided the branch is
established within one year from the date of this letter.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
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.)
Item No. 11
5/6/63
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
May
6, 1963
Board of Directors,
Bank of Las Vegas,
Las Vegas, Nevada.
Gentlemen:
The Board of Governors of the Federal
Reserve System approves the establishment of a
branch by Bank of Las Vegas in the.vicinity of
the intersection of East Fremont Street and East
Charleston Boulevard in an area adjacent to the
city limits of Las Vegas, Nevada, provided the
branch is established within one year from the
date of this letter.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
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.)
,
Item NO. 12
5/6/63
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
May 6, 1963
Board of Directors,
Fidelity Bank,
Beverly Hills, California.
Gentlemen:
The Board of Governors of the Federal
approves the establishment of a
System
Reserve
Brink, Beverly Hills, California,
Fidelity
by
branch
on Venice Boulevard between Wasatch and Centinela
Boulevards, Los Angeles, California, provided the
branch is established within six months from the
date of this letter.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
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.)
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 13
5/6/63
WASHINGTON 25, 0. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
May 7, 1963
Mr.w. s. Farmer, General Counsel,
Federal Resetwe Bank of Richmond,
HIchmond 13, Virginia.
Dear Mr. Farmer:
This refers to your letter to the Board of December 11, 1962,
a kihg for an interpretation under section 6(a)(2) of the Bank Holding
e
11111PanY Act of 1956 ("the Act") on behalf of The Bank of Virginia
(°
Bank"), and to your subsequent letters in this connection dated
127cember 27, 1962, and February 6, 1963, addressed to Mr. Thomas J.
Connell of the Board's staff.
In your letter of December 11, you advised that Bank had
•
outstanding
("
certain loans secured by stock in The Bank of Henrico
Henricou) and The Bank of Occoquan ("Occoquan"), which stock was to
exchanged on December 21, 1962, for stock in Virginia Commonwealth
,orporation ("Commonwealth"), a bank holding company to be formed in
.reordance with an Order of the Board of October 25, 1962, of which
'ank would also become a subsidiary at the same time and in the same
49.4ner.
r
Section 6(a)(2) of the Act forbids a bank "to accept the
va.tal stock ... of a bank holding company of which it is a subsidiary
'• • as collater'1 security for advances made to any person or company
1 74. ." and you had previously advised Bank, after informal discussions
:
l th members of the Board's Legal Staff, that the proposed exchange
'
a°uld constitute a violation of this provision. Bank accordingly made
effort to place the loans elsewhere before December 21, but by
L"ecelaber 11 concluded that it would not be successful in disposing of
a
011 of them, and for this reason asked you to obtain the Board's views
21 the applicability of the section in question under tne circumstances
qe
scribed.
It was impracticable to obtain the Board's views within the
time
indicated, and consideration of the matter was postponed pending
"ijurther efforts by Bank to correct the situation. Two of the loans,
°14ever, still remain outstanding, secured by stock of Commonwealth.
SYSTEM
BOARD OF GOVERNORS OF THE FEDERAL RESERVE
hr. W. S. Farmer
-2-
whether
The Board has considered the question raised by Bank,
to
bank"
"any
s
permit
the saving proviso of section 6(a)(2), which
tions
accept such capital stock, bonds, debentures, or any other obliga
ir
qualif
furthe
the
as security for debts previously contracted" with
two
over
of
period
a
for
cation that "such collateral shall not be held
Years" applies to the transactions in question. However, the common
understanding among bankers of the Phrase "debts previously contracted"
is that it refers to debts that have been contracted before taking
additional security, and it is the opinion of the Board that the
parent
gge of the proviso would not exempt capital stock of the
eral
collat
al
origin
the
of
company which was accepted in lieu
le
possib
for
avenue
an
open
to
fcr a loan. To hold otherwise would be
the
t
preven
to
was
which
),
6(a)(2
evasion of the purpose of section
advantage of the
possibility that a holding company might take undue
resources of its subsidiary banks. This result would follow because,
the
under a permissive rule, promoters might finance at least a part of
cost of forming such a company by buying up bank stocks with the
Proceeds of loans for which the stock was pledged as security, with a
original
view to substituting stock of the holding company for the
security after the company had been formed.
h=
ion of secThe Board concludes, therefore, that a violat
of Commonwealth
stock
tion 6(a)(2) of the Act occurred when Bank accepted
eral for
collat
as
in exchange for stock of Henrico which Bank then held
Board
the
that
d
advise
the loans in question. Commonwealth should be
as a
letter
your
of
ation
considers 90 days from receipt by that Corpor
from
l
remova
fide
bona
effect
reasonable period of time within which to
loans
the
for
eral
collat
as
Bank of the stock of Commonwealth now held
any
in question. It should be pointed out to officials of Bank that
that
and
ies,
penalt
al
crimin
to
t
willful violation of the Act is subjec
Ta,ction, if any, to enforce these provisions would be in-iituted by the
united States Department of Justice.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
f
Item No. 14
5/6/63
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
May 6
1963.
Mr, Harrison F. Houghton,
Senior Economist,
Committee on Banking and Currency,
House of Representatives,
Washington 25 D. C.
Dear Mr. Houghton:
This refers to your oral inquiry to Mr. Thompson concerning
the percentage of outstanding shares of Baystate Corporation, Boston,
MVsachusetts, owned directly by The First National Bank of Boston
( First National"), and your request for details concerning those
Shares which were held directly or indirectly by that bank in a fiduciary capacity, as referred to in the Board's recent Statement on the
a pplication of Norfolk County Trust Company for approval of consolidation with Wellesley Trust Company.
Baystate Corporation's published annual report for the year
1962 shows that at December 31 of that year there were 823,840 of its
Shares issued, that 61,220 shares were held as treasury stock, and
that there were 762,620 shares outstanding. As First National Bank
Owns 102,510 shares, such holding represents 13.4 per cent of Baystate
Corporation's 762,620 outstanding shares. Baystate Corporation is
°rganized under the laws of the Commonwealth of Massachusetts and it
aPPears that Massachusetts corporations cannot vote any shares of
their stock held as treasury stock.
With respect to the request for details of direct and indirect holdings of First National in a fiduciary capacity, the Board's
Statement on the Norfolk County case combined the fiduciary holdings
°f First National and Old Colony Trust Company (the stock of Old Colony
is trusteed for the benefit of shareholders of First National); such
holdings aggregate 17,152, or 2.2 per cent of Baystate's outstanding
Shares. The data available to the Board was as of a different date than
for the survey conducted at Congressman Patman's request; consequently,
there are certain differences between the holdings shown below and those
included in the survey. The fiduciary holdings to which the Board
referred are as follows:
Mr. Harrison F. Houghton
-2Shares of
Baystate
Corporation
First National Bank of Boston as fiduciary n/o Neb & Company, nominee
'
Old Colony Trust Company as fiduciary
Old Colony Trust Company Co-Trustee
(Apparently shown in your data - DH NITE MONO 27 - as nominee: Tarr & Co.)
Nominees:
Bob and Company
Clem & Company
Don & Company
Gus & Company
Ham & Company
Low & Company
7,142
3,339
800
200
1,720
500
800
2,653
Total - Old Colony Trust Company
10,012
Total fiduciary holdings
17,154
Per cent of Baystate's outstanding shares
2.2
The legal ownership of securities held as trustee, or in
similar fiduciary capacities, whether or not registered in nominee
names, is reposed in the holder or holders of the fiduciary appointment
and all incidents of legal ownership, including the power to exercise
voting rights with respect to shares so held are similarly reposed,
subject, however, to such restrictions on voting rights and other
matters which may be imposed by provisions of applicable trust instruments. Whether and to what extent Baystate's shares held under fiduciary
appointments may be voted by First National or by Old Colony in their
respective fiduciary capacities can be determined only by reference to
the provisions of the instruments creating and governing the separate
fiduciary appointments. Of course, in voting any shares held under
the
fiduciary appointments, the actions taken must be compatible with
designed
not
and
appointments
such
of
beneficiaries
best interests of the
to serve the interest of the fiduciary itself.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
.50:z
Item No. 15
5/6/63
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
May
6; 1963
Mr. Phillip S.
Hughes,
Assistant Director for
Legislative Reference,
Bureau of the Budget,
W
ashington 25, D. C.
Dear Mr. Hughes:
This is in response to your request for the views of the
Board of
Governors of the Federal Reserve System with respect to
the
draft bill to create an Administrative Conference of the United
Statese
The Board has reviewed the bill in question and agrees in
Pllneiple with the objectives sought to be accomplished.
However, two features of the bill are, in the view of the
Board,
objectionable.
First, the provision that the membership of the Administrative
Con
ference shall be preponderantly Federal personnel could very well
rulend to defeat the objective declared in section 4(b)(6) of the bill;
elY, to assure fladequate representation of the viewpoints of private
,'izens and the utilization of diverse experience". It is the Board's
]
I nderstanding that the Administrative Conference of
1961-1962) created
Executive Order 10934, consisted of approximately equal representaon between Government and non-Government personnel. It is believed
et serious consideration should be given to a similar structure for
," Permanent Administrative Conference. Completely apart from the
'fet that a greater degree of balance and objectivity would probably
:
r L OW from such a division of representation, public acceptance of and
'
lclIfidence in the Conference would no doubt be enhanced were it not to
aye even the superficial appearance of ”Government domination".
4T
J
J
The second objectionable feature of the bill is the provision
th
at in addition to appointees from the Federal agencies, the heads of
the
agencies shall also be members of the Conference. It is not believed
BOARD
Mr.
OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
Phillip S. Hughes
15O4.
-2-
thet
re such individuals could realistically
be expected to find the time,
tl arolaes
lesss of the degree of their interest, to devote continuing and
thou
attention to the affairs of the Conference, and that their
'1Vutory authority to designate alternate would
s
be invoked with
IZIlaritY. This would tend to defeat the purpose of having the agency
01,7's as members in the first place. It is believed that the interests
1,'(;rthe
agencies could adequately be represented by the appointees provided
the!
in section 4(b)(4) of the bill, and that in the interests of keeping
8ho -embership of the Conference to a manageable number, the agency heads
be omitted as members. It may be noted in passing
that this sugtien+1°n, if adopted, would make a major contribution toward the accomplishaxle' °f the suggestion made above regarding the balance between Governmen
t
non-Government members.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
505
BOARD OF GOVERNORS
Item No. 16
5/6/63
OF THE
FEDERAL RESERVE SYSTEM
WASH I NC3TON
OFFICE OF THE CHAIRMAN
May 6, 1963.
The Honorable Abraham J. Multer,
Chairman, Subcommittee on Bank Supervision
and Insurance,
Committee on Banking and Currency,
House of Representatives,
Washington 25, D. C.
Dear Mr. Chairman:
This is in response to your request of April 16, 1963,
for the Board's comments on H.R. 729, a bill to establish the
Federal Deposit and Savings Insurance Board.
The Board does not believe that it would be desirable,
as contemplated by this bill, to consolidate the management of
the Federal Deposit Insurance Corporation and the Federal Savings
snd Loan Insurance Corporation under a single agency.
To combine under a single Board the responsibility for
management of the two insuring corporations would lead to comminling of responsibilities which would blur the distinction between
°srik deposits and savings and loan share accounts. In our judgment,
this would be detrimental to the sound growth of both banks and
savings and loan associations.
There are important and, in our judgment, desirable
differences between banks and savings and loan associations. The
separate existence of these two types of financial institutions,
With Federal Insurance plans tailored to their particular needs,
°ffers the public a choice which we feel they should continue to have.
Furthermore, the supervision and examination of banks and
savings and loan associations should take into account the significant
d ifferences in the nature of their respective liabilities and the
assets that it is appropriate for them to hold in the light of these
differences.
Sincerely yours,
ail k5t;4
Wm. McC. Martin, Jr.
BOARD OF GOVERNORS
Item No. 17
5/6/63
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
OFFICE OF THE CHAIRMAN
May 6, 1963.
The Honorable James J. Saxon,
Comptroller of the Currency,
Treasury Department,
Washington 25, D. C.
Dear Jim:
This refers to your letter of March 11, 1963, asking
whether you are correct in your understanding "that the Board of
Governors of the Federal Reserve System reserves to itself the right
to interpret all sections of the National Banking Laws and regulations issued by the Comptroller of the Currency in their application to state member banks as it reserves the right to interpret
Section 5136 of the Revised Statutes by virtue of the twentieth
Paragraph of Section 9 of the Federal Reserve Act, as it applies
to state member banks."
Your understanding in this respect is substantially correct,
but some clarification of the Board's position appears desirable.
to
It may be misleading to say that the Board "reserves
banking
national
the
of
provisions
itself the right" to interpret
laws and the regulations of the Comptroller insofar as they apply
to State member banks. Rather, the Board believes that, in order
to discharge effectively its supervisory functions with respect to
State member banks, the Board must, when occasion demands, necessarily interpret any provisions of Federal banking laws and regulations that are applicable to such banks.
Obviously, it is desirable that Federal laws and regulations
interapplicable to both national banks and State member banks be
categories
both
to
as
manner
same
preted, as far as possible, in the
of banks. Over the years, this objective has generally been achieved
through consultation between the Comptroller and the Board.
s,
With particular reference to interpretation of regulation
al
Government
a
empowered
has
Congress
where
it seems clear that,
of
agency to issue regulations to implement particular provisions
should
agency
law, interpretations of such regulations by the issuing
be given persuasive weight unless they seem clearly erroneous. The
interpretaBoard has always followed this approach with respect to
investment
regarding
tions by your Office of your regulations
The Honorable James J. Saxon
-2-
of the
securities, issued pursuant to provisions of section 5136
banks by
Revised Statues that are made applicable to State member
section 9 of the Federal Reserve Act.
whether the Board
Your letter refers only to the question
nal Banking
reserves the "righe i to interpret sections of the "Natio
cy in
Curren
Laws and regulations issued by the Comptroller of the
to
refer
their application to State member banks". It does not
regula
and
Act
interpretation of provisions of the Federal Reserve
al
nation
to
ation
tions issued thereunder by the Board in their applic
by
ted
presen
is
n
banks. In this respect, an additional consideratio
certain provisions of the law.
es national
Section 2 of the Federal Reserve Act requir
with
comply
to
,
banks, as members of the Federal Reserve System
es
provid
It
aPPlicable provisions of the Federal Reserve Act.
ions
provis
such
with
further that, if a national bank fails to comply
the
under
ises
franch
°f the Act, all of its rights, privileges, and
that any such
National Bank Act "shall be thereby forfeited", and
United States in
the
of
noncompliance shall be determined by a court
the Board of
of
ion
a suit brought for that purpose "under direct
oller of the
Comptr
the
of the Federal Reserve System, by
Currency". (12 U.S.C. 501a)
that, in a letter
In this connection, the Board has noted
to.a national bank dated March 4, 1963, you stated that it is the
of 12 U.S.C. 461
Pinion of your Office that, under the provisions
Reserve Act) and
l
Federa
the
of
(the first paragraph of section 19
Q), an organiation
(Regul
nder
thereu
under regulations of the Board
zatlon known as "Associated Hospital Service" is "eligible to mainletter referred to
tain a savings deposit in a National Bank". Your
Bulletin,
a published interpretation of the Board (1960 Federal Reserve
n.
opinio
te
P. 1124), in which the Board had expressed the opposi
Reserve Act prohibits
As you know, section 19 of the Federal
ctly, on any
indire
member banks from paying interest, directly or
of Governors
Board
the
demand deposit (12 U.S.C. 371a) and requires
banks on
member
by
paid
to limit the rate of interest that may be
es, the
purpos
these
For
time and savings deposits (12 U.S.C. 371b).
izes
author
sly
expres
461)
first paragraph of section 19 (12 U.S.G.
d
"deman
terms
the
ing
includ
the Board to define certain terms,
shall be deemed
dePosits" and "savings deposits", to determine what
tions to effecregula
ibe
prescr
to be a payment of interest, and to
tion Q, issued
Regula
s
Board'
The
tuate the purposes of section 19.
gs deposits" as including
Pursuant to this authority, defines "savin
ted primarily for * * *
deposits of nonprofit organizations "opera
Charitable * * * purposes".
The Honorable James J. Saxon
-3-
, did not set forth the
While your letter of March 4, 1963
d that Associated
state
it
d,
reason for the opinion there eXpresse
anized under a
"org
n
ratio
corpo
Hospital Service is a non-profit
benevolent inand
table
chari
statute which describes it to be a
alone, your
on
reas
this
stitution"; and it is assumed that, for
rily for
prima
ted
opera
is
Office concluded that this institution
Charitable purposes.
1960 interpretation,
As was pointed out in the Board's
it was organized declares
although the State statute under which
institutions",
!uch organizations to be "charitable and benevolent
"operated"
it appears that Associated Hospital Service is not actually
for
plan
available a
for charitable purposes. In fact, it makes
which
under
benefits
hospital insurance and medical and surgical rsements by the Associadisbu
upon
based
Payments by subscribers are
the plan clearly
tion and are computed on an actuarial basis, and
Board, therefore, continues
involves no "charitable" elements. The
not
tO be of the opinion that a deposit of this organization does
in
forth
set
sit"
fall within the definition of a "savings depo
unless such a
gly,
rdin
Acco
Q.
ation
Regul
section 217.1(e) of
Regulation Q,
.1epo5it came within the definition of a time deposit in
(
interest
of
nt
payme
it would constitute a demand deposit, and the
of section 19
n
bitio
prohi
te the
thereon by a national bank would viola
on demand
est
inter
of
nt
of the Federal Reserve Act against the payme
law, would
of
r
matte
a
as
n,
violatio
deposits by member banks. Such a
Act to
the
of
2
ion
sect
under
s
warrant the institution of proceeding
hises should be forfeited.
determine whether the bank's franc
Sincerely yours,
Wm. McC. Martin, Jr.
@FedFRASER