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CAO S /4.4t0,0.0 : M I 1114es of actions taken by the Boari of Governors of the nya °serve System on Tuesday, November 16, 1948. The Board met 8°arci Room at 3:20 p.m. PREsFaT: Mr. Mr. Mr. Mr. Mr. Mr. Eccles, Chairman pro tem. Szymczak Draper Evans Vardaman Clayton Mr. Mr. Mr. Mr. Mr. Mr. Mr. Carpenter, Secretary Sherman, Assistant Secretary Morrill, Special Adviser Thurston, Assistant to the Board Riefler, Assistant to the Chairman Vest, General Counsel Thomas, Director of the Division of Research and Statistics Mr. Leonard, Associate Director of the Division of Bank Operations Mr. Young, Associate Director of the Di— vision of Research and Statistics tizic ci that tilrideisseustated e that Chairman McCabe would be delayed and had A_ : sion of matters on the docket proceed.. MI% Claytoa referred to the applications received from the Bank fir'q'tea thirs&S.A. for permission to establish foreign branches in " discussed at earlier meetings of the Board and to the let— tte date of September 3, 1948, to Comptroller of the "king for morr detailed comments relating to the e tl)leti ' e of the aPPlicatisonubsiBasehenk.otuslodasfbreiagehprptircbaoveledrite.lseH:entsatidoan alj 'eh other dividend est o pn o1i the dtthhaetgu a 16 reply 4/16/48 _ r'ecelved fro, Comptroller Delano under date of September 20, 1948, stet that it was the opinion of that office that, so fnr as monoNrwas concerned, the question of foreign branches for the Bank of involved the same princiole as domestic branches, the differerieg O nlY one of d egree' Mr. Clayton stated that 8 letter was 'I-s() sent to Chairm an Hanl of the Federal Deposit Insurance Corporation 4.11er dRte of September 3) 1948) after Chairman Hani. indicated thnt the Cc`rPoN.tion h.P,c1 an interest in the opening of additional branches of 111Y ilisured bank, but that no resoonse had been received thus far. Clayton said that an additional application from Bank of k'Irica' reouesting t'llteh permission to establish a branch at Bangkok, Siam, aPPlicPtion was ' ''''s riw referred to at the meeting on October 19, 1948, under t° consideration, and that the ouestion had been raised as l'hether letters should be sent to Comptroller Delano and Chairman 4rle"ing f°r their views with respect to authorization oC the branch. Mr' SzYmczak referred to the letter from Comptroller Delano '111Q11 41clico.ted that the application of Bank of America for branches Gerl'ir4. sh°1'ld not be approved because their establishment might be tlIN1i8terit With the Proceeding Lnstituted by the Board against Trans`11 ti ? aP, CorDoration. Clayton Act, and he went on to say that under the et 1ters of both the Comptroller of the Currency and inquiry to t0 kr,s.rlt belposit t- Insur'?-nee Corporation should be written with re- aPplicatio-a for a branch in Bangkok, Siam, for the purpose 01,141,th ether those agencies had any objection to the establishbr ' e rl°h on ground s other than that the ouestion of monopoly 11/16/48 _3_ In the course of an extended discussion of this point, during lich Messrs. gestecl Townsend, Associate General Counsel, and Millard, Director lpilrision of Exazinations, entered the meeting, mr. Eccles sugthat letters be prepared to Comptroller Delano and to Chairman 1141 °I the Federal Deposit Insurance Corporation asking specific ques' 48 CO the desirability of approving the proposed Siam branch iDllettellse basis of the bank's capital structure, its loan and dividend poi'allci its foreign branch operating record to date, that a conferetice e ll*Einged With ;,ir. Delano for the purpose of ascertaining to ' /the,t e 4, x4eht his office will assist in developing the facts in the profile ag8111st Tr ansamerica Corporation, that a letter be written to fiO4. el'al Reserve Bank of San Francisco asking whether the recoramenda141 its i h letter of blke September 302 19a, for approval of the Siam tlz,rdial.1()111c1 be changed by developments since that time, that the Rtesearch D ivision be requested to prepare a memorandum with 48Peet DoElm brztt ° ec°11°11lic and other prospects in the area in which the proCh l'Iould tqtted p operate, and that all of this information be sub.Lor Consideration at a future meeting of the Board. Upon, motion by Mr. Szymczak, Mr. Ec"'est suggestion was approved unanimously. Ref cikt ci erence was then made to the letter received from the Presi- NeQt t liNtt se 4t. t() 194i, 'ate Of November 6, 1948, asking for the Board's views with 1116terit'l for the State of the Union message, the Economic the ...egislative program, and to the outline of questions 4ber e IS of the Board with a memorandum dated November 10, celltlection, Mr. Eccles asked mr. Thomas to report on 11/1648 -4- the leeting which he attended yesterday afternoon, November 15, at the l'ilreala of the Budget concerning the legislative program. Mr. Thomas stated that the discussion at the Bureau of the Buddealt principally with details of legislation that might ue Proposed and not with policy questions, that when the question of credit controls sraised he stated that the Board had not reached a deeision as to Spec ificlegislation that would be recommended but that 411 lotig run matter the System needed additional controls if it was the J°11 aPparently expected of it, and that it probably would be lieeessarY to do som ext spring toward extending the temporary E'41,04cy provisions ethingn passed at the special session of Congress in AuWits respect to 'ePort, bank reserves and consumer credit controls. C41-1-111an McCabe entered the meeting at the close of Mr. Thomas' There f ArA °110wed a brief discussion of material that should be -PaN in l'esPonse to the President's letter but no conclusions were alld, because of the lateness of the hour, it was agreed that : 111 7 11: i rtItIOrl Of the matter would be continued at a meeting at 10:30 cirlesc141 ni°/•riing, November 17, 1948' At '41‘ this point Messrs. Riefler, Vest, Thomas, MillPrd, Leonard, ND : .11cillic31411send withdrew from the action stated with hereinafterand the meeting et to tot,z,cit each of the matters referred to was taken by the b qeeerior es of actions taken by the Board of Governors of the Fed- -on November 15, 1943, were approved unanimously. -5Letter to Mr. Sheehan, Chief Examiner of the Federal Reserve Ilk of New York, readi ng as follows: 1948 "Reference is made to your letter of November 5, 138., submitting the recuest of The Marine Trust Com4.2f Buffalo, Buffalo, New York, for permission to aulish a branch in the Town of Tonawanda, New York. allthorities "It is noted that approval of the appropriate State zenci has been obtained and in view of your recomh zeritati°r1, the Board of Governors approves the establis yand oPeration of a branch in the Town of Tonawanda, falo c'm rk P bY The Marine Trust Company of Buffalo, Bufwith' "aw York, provided such branch is established 4.°118 Year of the date of this letter. It is s'Agod that counsel for the Reserve Bank has retalter, ed4ancl is satisfied as to the legality of all steps the '4z) establish the branch which are complete with (3reg°ing approval of the Board." Approved unanimously. of Letter to Mr. Diercks, Vice President of the Federal Reserve Chicago, reading as follows: 1948 "11,eference is made to your letter of Novembed rs8, that ''rora which the Board of Governors understan tl 1:111riP11 exPect to examine jointly or independently ,eral. L: IMS all State Fed amember banks in the Seventhdy y13,--erve District, Harris Trust except the an requesc, Chioa--, Go Illinois, and notes that you t, at utitPilertotssion. to forego an examination of n hi alter January 1, 1949. tAll4t ex112 1 1aw of the information submitted, Savingsan it appears Atrtrip,—.41, -Lnation of the Harris Trust and lloaa,,i° 4-948 would be impracticable. Therefore, the t not :4 rent require the examined during that be it ----kend ihar year but it that the is assumed n °11 will be exalTlined early in the year 1949. Approved unanimously. tett 0 Mr, 411at or Me Davis, Assistant Vice President of the Federal York, reading as follows: 11/16/48 —0— c "This refers to your letter of November 4 regarding 6jertain tr ansactions at Bergen Trust Company, Jersey City, IC jerseY, Which appear to have been violations of egqation us lir D It is understood that in a letter dated July 7, 1948, ti, i 4 eter T kixehati,_ • Byrne, Regional Administrator, Securities and leli,ce u ommission, informed you that the records of the ti 4.3rit Stock Exchange in connection witn an investigac : of the activities of a member firm disclosed that a zerabstclerable volizne of security purchases effected by a nan, e, r firm for certain customers appear to have been which fiiild ;e bY Bergen ' Trust Company under circumstances -keatted .1. Possible violations of Regulation U. Ineniberl_ ▪ aeriluch as Bergen Trust Company is an insured nontxamm • " talc) You referred the matter to the Supervising f appro—ell , of the Federal Deposit Insurance Corporation or NovezTlr"tate investigation. You received a letter dated ttg Ex„ eTh , r 1$ 1948, from Mr. Neil G. Greens/des, Supervisvisin -"4-rier, Federal Deposit Insurance Corporation, adt1 l rn g,Tht11, 18t an investigation has revealed that a substanualrin ' el' of ny tioa II 1946 andloans were made by Bergen Trust Company 1947 in an apparent disregard of RegulaPre , ) that the loans had been handled personally by J148''c9 lent Dwy e,,er of Bergen Trust Company who died on,19 4°) that the present management of Bergen Trust "estigit+7" fully cooperative in the conduct of the inl'ith Re vic'n and has indicated an intention to comply ai.t the rat,U, that no loans presently outstanding an '4•011 of 2st Company appear to have been made in violacpIt the i,71,e' l egulation, and that in future examinations ' (*Porat— is6itution by the Federal Deposit Insurance claia?, °11 ?xaminers careful note will be made as to -ce nu,,, 141th the provisions of Regulation U. ‘ e 07er date Of November 31 1948, you advised ,Ir. lort the cir cumstances disclosed by the investigar°Nard eAsia ,,, ed to him a copy of the letter requested him to advise you promptly fom opt ' llr.of '`°lEttio , -' 4 11 the future which appear to involve possible y b 11., 111/1°f RegUlatiOn U. t ti.4e•ti./. t '''Ae absence of further developments there would al, ° be not nk hingfurther for the Board or your ,...7 t1/3)01,-(311t the matter at the present time, but it will '•'eirl-aleiated if ou will keep in touch with the Super'tio-n; xi arnt1, 1-11ers ofYthe Federal Deposit Insurance CorplIsSecl-toatiview to e assuring that special attention the question of compliance with Regulation rtltllre exkminations of the Trust Company." Approved unanimously. 13/4 11/16/48 -7Letter to Mr. Les Kelley, Publisher, Kelley Blue Book, 1221 S°11th Figueroa Street, Los Angeles 15) California, reading as follows: 1.9.a "This is in reply to your letter dated October p Book' requesting that the Board designate the Kelley Blue for the purposes of Regulation W in the states of to-:Tla, Colorado, Wyoming, and New Mexico, in addition present designation for Region C. that In support of your request you take the, position Bstl .„Iverage retail used car prices in these lour Region c are aPproximately the same as those in the egio a"8 area, and that the present requirement that the used for-i Prices quoted in Region B appraisal guides be h-trd_ shi eg w purposs purposes in these states occasions liMiting the maximum credit value to less than LIL,rds of the true market prices. inte are correct in yo your belief that it is not the 44hic4 Regulation W to curtail business or occasion fleet :P by the use of appraisal guides which do not re11e market d prices. On the contrary, we are very l a take nterested in seeing that the designated guides o Prevatir,easonably successful effort to estimate the thet th ig market prices in the areas they cover, and 1 corisist'r estimating are not i npolicies and methods "lent with this objective. : Nice 1 will understand, however, that we would be , Po. rices z eci A411°t , only if designated guides harmfully quoted --erlally below the market, but also if they the a Prices above the market. In the latter event :111 3 ,T 3 8, 11rovision of the regulation would retl a i,,s'eu and guideP theguide quoting such high prices, if kqti-ed its 4.ire"ad designatio ) might gain an unfair comvantage over other guide books. 4t tle tooks "It : enis to us that the designation of the Kelley the states of Montana, Colorado, Wyoming, as well as for Region C, would be incon14 the P of Regulation WI in that it tlales1Z0-17: Z in the designation of retail Zivientualres thoa West cor_e market in these states. It appears ta4,,e average normally are higher than ,,,,,ketni+.4ese ur states. Even though in an abnormal formal i'4'ttel-irtc,ion there may be instances in which prices dtt.'eee st °Est may be comparable with certain prices tikture.%?111ates) there is no assurance that such a cone°1atinue very long or even for the near 11/1648 -8"In general, it does not appear practicable market to adapt , e aPPraisal guide more precise designations to T ti als unless this is done through designation of 4e ti414bodks he specifically designed for smaller areas than Present three Regions. If the present designations ate srtended to cover greater areas than these three Re89 as you request for your guide, there would be a s Vrather than a gain in the precision with which the Teraisal e th... broaderstimates applied in individual market areas. the area covered, the less accurately will il:testiiiiated prices reflect not only the differentials Sup I:iazsportation charges but also all of the many local frora P'Y arid demand change factors which cause prices to compared e e to time in one market or trading area t %lith j th in another area. .ror these reasons the Board has decided against Blue g Your request for the extension of the Kelley Sitlee (1°1c d esignation to cover the four additional, states. ePPreAth nie Board is interested in having the de.siznted ' faluPs Es close to the market as possible, howdecision should not be considered as standeclitiV,he Y of the designation of any future special 1)1Y to ()-4°1 aPpraisal , uides particularly designed to ape P4resent7 f.re four states or to other subdivisions of the ated ;iree Regions. Before such editions were desIlaturell'°r the purposes of Regulation W, the Board arid Would need to have assurances that the methods a°4Ekb eies used Were designed so as to provide reae°er \r ed.n 'ecurate value estimates for the specific region ;eren L: Approved unanimous Secretary.
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