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FR 609
Minutes for November 2, 1966
To:
Members of the Board
From:
Office of the Secretary
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. Robertson
Gov. Shepardson
Gov. Mitchell
Gov. Daane
Gov. Maisel
Gov. Brimmer
Minutes of the Board of Governors of the Federal Reserve
System on Wednesday, November 2, 1966.
The Board met in the Board
Room at 10:00 a.m.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Martin, Chairman
Robertson, Vice Chairman
Shepardson
Daane
Maisel
Brimmer
Kenyon, Assistant Secretary
Molony, Assistant to the Board
Cardon, Legislative Counsel
Fauver, Assistant to the Board
Hackley, General Counsel
Farrell, Director, Division of Bank
Operations
Mr. Solomon, Director, Division of Examinations
Mr. Shay, Assistant General Counsel
Mr. Daniels, Assistant Director, Division of
Bank Operations
Mr. Leavitt, Assistant Director, Division of
Examinations
Mr. Thompson, Assistant Director, Division of
Examinations
Miss Wolcott, Technical Assistant, Office of
the Secretary
Mrs. Heller, Senior Attorney, and Mr. Shuter,
Attorney, Legal Division
Mr. Ring, Technical Assistant, Division of Bank
Operations
Messrs. Egertson and Maguire, Supervisory Review
Examiners, Division of Examinations
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Approved items.
The following items were approved unanimously
after consideration of background information that had been made available to the Board.
Copies are attached under the respective numbers
indicated.
Item No.
Letter to Peoples Trust Company of Bergen County,
Hackensack, New Jersey, approving the establishment of an in-town branch and commenting on the
bank's capital position.
1
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11/2/66
Item No.
Letter to Citizens Bank of Monroe, Monroe, New
York, approving the establishment of a branch
in Harriman.
Reports on competitive factors.
2
A report to the Federal Deposit
Insurance Corporation on the competitive factors involved in the proposed
merger of The Kouts State Bank, Kouts, Indiana, with Farmers State Bank,
Valparaiso, Indiana, was approved unanimously for transmittal to the
Corporation.
The conclusion read as follows:
Consummation of the proposed merger would eliminate a
moderate amount of existing and potential competition between
The Kouts State Bank and Farmers State Bank, Valparaiso, primarily in the area served by the Kouts bank. The overall competitive effect of the proposed transaction would be slightly
adverse.
A report to the Comptroller of the Currency on the competitive
factors involved in the proposed merger of First National Bank of
Lexington, Lexington, Mississippi, and Pickens Bank, Pickens, Mississippi,
was approved unanimously for transmittal to the Comptroller.
The con-
clusion stated that the proposed merger would not have adverse competitive
effects.
A modification of the conclusion having been agreed upon, unanimous approval was given to the transmittal to the Comptroller of the
Currency of a report on the competitive factors involved in the proposed
purchase of assets and assumption of liabilities of Mission National Bank,
Peoples Bank, and Pioneer National Bank, all of Los Angeles, California,
-3-
11/2/66
by United States National Bank, San Diego, California.
In the form in
which approved, the conclusion read as follows:
The acquisition of Mission National Bank, Los Angeles,
Peoples Bank, Los Angeles, and Pioneer National Bank, Los
Angeles, by United States National Bank, San Diego, would
eliminate existing competition and would eliminate potential
for more competition among the four banks.
The overall effect of the transactions on competition
would not be significantly adverse.
Status of Moody Foundation (Item No. 3).
There had been dis-
tributed a memorandum from the Legal Division dated October 28, 1966,
relating to a request from attorneys for the Moody Foundation, Galveston,
Texas, for a determination as to the status of the Foundation under the
Bank Holding Company Act, as amended July 1, 1966.
Prior to the 1966
amendments to the Holding Company Act, the Foundation, a privately-created
foundation with perpetual existence, organized and operated for religious,
charitable, and educational purposes, had been excepted from the definition of "company."
However the so-called "charitable" exemption had been
deleted from the Bank Holding Company Act, and the Foundation was now
clearly classified as a "company."
From the facts presented the Legal
Division concluded that the Foundation was a bank holding company by
virtue of its direct or indirect ownership or control of 25 per cent or
more of the shares of each of two banks, namely, Moody National Bank and
Bank of Galveston, National Association, both of Galveston, Texas.
In
addition, it was the opinion of the Legal Division, for reasons expressed
-4-
11/2/66
in the memorandum, that the Foundation qualified as a bank holding company on the basis of its direct or indirect ownership or control of
25 per cent or more of the outstanding shares of W. L. Moody & Co.,
Bankers, Galveston, Texas, a private unincorporated bank, and of a second bank (Moody National and/or Bank of Galveston).
In this connection
question arose as to the status of a private unincorporated bank within
the meaning of the Bank Holding Company Act.
It was the conclusion of
the Division that a private bank was a "bank" within the definition of
that term in section 2(c) of the Bank Holding Company Act, if it was an
institution that accepted demand deposits; also that it was a bank within
the meaning of that term as used in section 2(a) of the Bank Holding Company Act.
Attached to the distributed memorandum was a proposed letter to
the attorneys for the Moody Foundation that would set forth the conclusion that the Foundation was a bank holding company, define a private
bank as being a bank within the meaning of the Bank Holding Company Act,
and deny, for the time being at least, the request of the Foundation for
an extension of time within which to file a registration statement under
section 5(a) of the Bank Holding Company Act.
In commenting on the matter Mrs. Heller raised the question
whether the Board wished to take a position at this time on the status
of private banks within the meaning of the Bank Holding Company Act, as
amended.
Comments by members made it clear that the Board was willing
-5-
11/2/66
to take a position, and there was general agreement with the approach
set forth in the proposed letter.
In this connection, however, Governor Brimmer raised a question
as to the number and size of private banks presently in existence, adding
that his question reflected a conviction that whenever the Board was considering an interpretation it was important to have accurate information
as to the magnitudes involved in terms of who would be affected and how.
After some information on the number of private banks had been supplied
by staff, Mr. Hackley observed that although the question of the status
of a private bank under the Bank Holding Company Act had not arisen previously, in January 1964 the Board, in response to an inquiry from the
Federal Reserve Bank of New York, had ruled that a private bank (Brown
Brothers Harriman & Co.) was a "bank" within the definition of that term
in section 1, paragraph 2, of the Federal Reserve Act and was eligible
to maintain a nonmember clearing account; that interpretation was subsequently published.
Mr. Hackley noted that it would seem inconsistent
to hold that a private bank was a bank for such purpose but not for
purposes of the Bank Holding Company Act.
Governor Brimmer indicated
that in view of that background he would be satisfied to go ahead with
the proposed interpretation.
Unanimous approval was then given to the letter to the attorneys
for the Moody Foundation, a copy of which is attached as Item No. 3.
Permission to carry reduced reserves (Item No. 4).
There had
been distributed a memorandum from the Division of Bank Operations dated
11/2/66
-6-
October 24, 1966, to which was attached a draft of letter to the Federal
Reserve Banks that would consolidate the Board's outstanding instructions
with respect to the handling of cases involving permission for member
banks in reserve cities to carry reduced reserves.
The letter would
supersede the Board's letters of August 9, 1946, and July 31, 1959, and
serve as a reference for use in conjunction with section 19 of the Federal Reserve Act and Regulation D (Reserves of Member Banks) in the
handling of such cases.
Following remarks by Mr. Ring supplementing the distributed
material, certain suggestions for editorial changes in the draft letter
were made by members of the Board.
Unanimous approval was then given to
a letter to the Reserve Banks in the form attached as Item No. 4.
Suggested amendments to Regulation O.
There had been distributed
a memorandum from the Legal Division dated October 26, 1966, relating to
suggested amendments to Regulation 0 (Loans to Executive Officers of Member
Banks) that would (1) exempt from the restrictions of the Regulation
indebtedness incurred by an executive officer in connection with charge
accounts, and (2) in effect restrict the application of the definition of
"executive officer" to top management.
Pursuant to action taken at the meeting on August 19, 1966, a
proposed amendment relating to charge accounts was published in the
Federal Register for comment, and a draft amendment relating to the definition of "executive officer" was sent to the Federal Reserve Banks for
continent.
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11/2/66
Comments received on the "charge account" amendment were generally favorable, although a technical change suggested by the Federal
Reserve Bank of Minneapolis was thought to have merit.
As originally
drafted, the exemption covered "charge or time credit accounts," which
are defined in the Uniform Commerc ial Code to exclude accounts evidenced
by instruments, i.e., notes.
The Legal Division recommended adoption
of an amendment to Regulation 0 so worded as to make it clear that the
presence or absence of a note would not affect the application of the
exception contained therein.
Following remarks by Mr. Shuter supplementing the distributed
material, Mr. Hackley referred to a telephone call from a Boston attorney
who raised a question as to the applicability of the proposed "charge
account" amendment to operations under certain bank credit card plans.
Mr. Hackley indicated that the Legal Division had not had an opportunity
to study the question, which was to be presented by the attorney in
letter form, in light of the amendment as now constituted, and he suggested that adoption of the proposed amendment be conditioned upon a
finding by the Legal Division that the material received from the Boston
attorney did not present problems that should have further consideration
by the Board.
Unanimous approval was then given to proceeding on the basis
outlined by Mr. Hackley.
Among the comments by the Reserve Banks on the proposed amendment defining "executive officer" was a suggestion that the definition
11/2/66
-8-
include as a standard, in addition to participation in general management, responsibility for establishment of policy.
The reaction of the
Legal Division was favorable, and the Division now recommended that a
proposed amendment to Regulation 0 incorporating this suggestion be
published in the Federal Register for comment.
Members of the Board explored various aspects of the matter,
including the meaning of the term "top management," possible interpretations of the intent of the applicable statute, the role of the lending
officer, and the effect of the proposed definition in terms of the operations of both large and small banks.
Several suggestions for modification
of the language of the proposed amendment were made, principally by
Governor Robertson.
It was understood that the Legal Division would consider a
revised draft of definition of "executive officer" in the light of today's
discussion with a view to further consideration of the matter by the Board
at a subsequent meeting.
Michigan National Bank matter.
There had been distributed a
memorandum from Mr. Hackley dated November 1, 1966, referring to a telephone inquiry from Counsel for the Michigan Bankers Association as to
what action the Board planned to take on the proposal by Michigan
National Bank, Lansing, to acquire at least 80 per cent of the outstanding voting stock of Michigan Bank, National Association, Detroit.
This
inquiry gave rise to the question of how future calls should be handled.
11/2/66
-9-
Attached to the memorandum was a suggested guideline for possible use
by the Board's staff that would briefly state the Board's position in
the matter and indicate that the Board's views had been communicated to
Michigan National Bank.
(The Board's views had been communicated to the
bank in a letter dated October 31, 1966.)
In discussion various approaches were considered, including the
possibility of issuing a public statement.
In this regard consideration
was given to the public relations aspects involved, both from the standpoint of the member banks concerned and the general public.
Governor Robertson expressed a preference against revealing the
position taken by the Board in supervisory correspondence with a particular bank.
He suggested replying to inquiries on the Michigan National
Bank matter to the effect that the Board had taken the position in the
past that it was illegal for a member bank to acquire the stock of
another bank; that if a bank's pension fund owned stock of another bank,
control of that stock would be attributed to the bank itself for purposes
of the Bank Holding Company Act; and that if a bank through a pension
fund acquired 25 per cent or more of the voting stock of another bank,
it would become a bank holding company.
He further suggested that no
public statement be issued at this time.
There was general agreement that inquiries should be answered
along the lines suggested by Governor Robertson and that consideration
of the issuance of a public statement should be deferred pending developments.
11/2/66
-10All members of the staff except Messrs. Kenyon and Fauver then
withdrew from the meeting.
Director appointment.
In light of developments since the date
of the Board's action on September 22, 1966, relating to the appointment
of a director of the Pittsburgh Branch of the Federal Reserve Bank of
Cleveland to succeed Dr. Bach, it was agreed to ascertain through the
Chairman of the Bank whether Lawrence E. Walkley, President of the
Westinghouse Air Brake Company, Pittsburgh, Pennsylvania, would accept
appointment if tendered for the unexpired portion of the term ending
December 31, 1966, and for the three-year term beginning January 1, 1967,
with the understanding that the appointment would be made if it were
found that Mr. Walkley would accept.
Secretary's Note: It having been ascertained that Mr. Walkley would accept the
appointment if tendered, an appointment
telegram was sent to him on November 3,
1966.
Mr. Fauver then withdrew from the meeting.
Balance of payments.
Governor Brimmer commented on the nature
of discussions that were taking place within the Cabinet Committee on
the Balance of Payments, particularly with respect to the terms on which
the voluntary program administered by the CoLianerce Department for restraint
on foreign investment by U.S. corporations would be carried forward into
1967.
He noted in this connection that it appeared to be the thinking
that monetary policy should not have to bear as much balance of payments
11/2/66
-11-
responsibility in 1967 as it would if the present voluntary programs
were dismantled.
He then indicated that he had been thinking of the
possibility of establishing a task force from among the Board's staff
to try to conceive a viable longer-run position in relation to the
balance of payments on the basis of which Governmental policy guidelines
might be recommended and that Mr. Solomon (Adviser) had been working
with him on the question of how to put together such a task force.
He
hoped to be able to submit a concrete proposal for the Board's consideration within the near future.
It was his tentative thinking that at
least initially the task force would be drawn from within the Board's
organization, rather than the System as a whole.
Governor Daane suggested that further thought be given to the
feasibility of including personnel from Reserve Banks, or at least the
New York Bank, in such a task force, to the extent that the limits of
confidential information would permit, on the basis that their capabilities in the balance of payments area might be of considerable value.
Governor Daane went on to say that since the Cabinet Committee
apparently had rejected the idea of a suspension of the Board-administered voluntary foreign credit restraint program the matter was now in
the posture of looking for the most appropriate program guidelines for
1967.
He reviewed some of his thinking concerning possible alternatives,
including those that he would consider undesirable, and it was understood
that the subject would be discussed by the Board in more detail on Monday,
4
'
11/2/66
-12-
November 7, on the basis of proposals being formulated by Governor
Robertson.
Staff appointment.
The Board approved the appointment of
Charles C. Walcutt as Assistant Chief Federal Reserve Examiner in the
Division of Examinations, a newly created officer position, with salary
at the rate of $20,000 per annum, effective as of the date of Mr. Walcutt's
entrance upon duty.
The meeting then adjourned.
Secretary's Notes: On November 1, 1966,
Governor Shepardson approved on behalf
of the Board the following items:
Letter to Mrs. Jessie Mullins, George Washington University, confirming arrangements for a 15-hour course in secretarial training for
stenographers and secretaries at the Board in connection with the Board's
Employee Training and Development Program, a fee of $700 to be paid the
University at the completion of the course.
Letter to the Federal Reserve Bank of San Francisco (copy attached
as Item No. 5) approving the appointment of Robert N. Goff, Wilbert M.
Nylander, William T. Speer, Jr., and James W. Stacey as examiners.
Memoranda recommending the following actions relating to the Board's
staff:
Salary increases
Howard B. Cloth, Attorney, Legal Division, from $6,451 to $7,696
per annum, effective November 20, 1966.
Dorothy Werner, Analyst, Division of Bank Operations, from $7,942
to $8,479 per annum, effective November 6, 1966.
Letters were sent today to First National
City Bank, New York, New York, acknowledging receipt of notice of its intent to
establish the following branches: (1) an
additional branch in Chile, to be located
11/2/66
-13in the Estacion Central Section of Santiago,
and (2) an additional branch in Hong Kong,
to be located in the Hotel Merlin, Kowloon.
The letters noted that the expenditures
required to establish the branches would
be provided from available local funds.
A letter was sent today to International
Banking Corporation, New York, New York,
acknowledging receipt of advice that The
First National City Bank of New York (South
Africa) Ltd. intended to establish an additional branch in South Africa, to be located
in the Township of Isando, Transvaal Province.
Governor Shepardson today approved on behalf
of the Board the following items:
Letter to the Federal Reserve Bank of Chicago (copy attached as
Item No. 6) authorizing Peter Bacon, a research fellow in the Bank's
Research Department, to have supervised access to certain reports of
examination of Fidelity Trust Company and of Fletcher Trust Company,
both of Indianapolis, Indiana, for use in connection with his doctoral
dissertation dealing with bank mergers in the Indianapolis area.
Letter to the Federal Reserve Bank of Richmond (copy attached
as Item No. 7) approving the appointment of Lawrence P. Nuckols and
Francis F. Falls as assistant examiners.
Letter to the Federal Reserve Bank of St. Louis (copy attached as
Item No. 8) approving the appointment of Paul R. McAllister as assistant
examiner.
Memoranda recommending the following actions relating to the Board's
staff:
Appointment
James F. Leyman as Assistant Federal Reserve Examiner, Division of
Examinations, with basic annual salary at the rate of $7,696, effective
the date of entrance upon duty.
11/2/66
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Salary increases, effective November 6, 1966
Name and title
Basic annual salary
To
From
Division
Examinations
Adrien P. Francoeur, Federal Reserve Examiner
C. Hadley Fraser, Federal Reserve Examiner
Roger A. Haskell, Assistant Federal Reserve
Examiner
Carl A. Zimmerman, Assistant Federal Reserve
Examiner
$10,796
10,796
8,740
$11,685
11,685
9,536
8,740
9,536
Assistant Secretary
BOARD OF GOVERNORS
Item No. 1
11/2/66
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS
orriciAL
CORRESPONDENCE
TO THE BOARD
November 2, 1966
Board of Directors,
Peoples Trust Company of Bergen County,
Hackensack, New Jersey.
Gentlemen:
The Board of Governors of the Federal
Reserve System approves the establishment by
Peoples Trust Company of Bergen County, Hackensack,
New Jersey, of a branch at the intersection of
Route 4 and Hackensack Avenue, Hackensack,
Bergen County, New Jersey, provided the branch is
established within one year from the date of this
letter.
The Board understands consideration is
being given to all means of strengthening your
bank's less than satisfactory capital position.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
(The letter to the Reserve Bank stated that the
Board also had approved a six-month extension
of the period allowed to establish the branch;
and that if an extension should be requested,
the procedure prescribed in the Board's letter
of November 9, 1962 (S-1846), should be followed.)
111
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 2
11/2/66
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
November 2, 1966
Board of Directors,
Citizens Bank of Monroe,
Monroe, New York.
Gentlemen:
The Board of Governors of the Federal
Reserve System approves the establishment by Citizens
Bank of Monroe, Monroe, New York, of a branch in the
vicinity of the intersection of State Route 17M and
Church Street, Harriman, Orange County, New York,
provided the branch is established within one year from
the date of this letter.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
(The letter to the Reserve Bank stated that the
Board also had approved a six-month extension
of the period allowed to establish the branch,
and that if an extension should be requested,
the procedure prescribed in the Board's letter
of November 9, 1962 (S-1846), should be followed.)
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 3
11/2/66
WASHINGTON, D. C. 20551
AOOREMB orriciAL OORRICSPONDIENCC
TO THE IMOARO
November 2, 1966.
Louis J. Dibrell, Esq.,
Dibrell, Dibrell & Greer,
American National Building,
Galveston, Texas. 77550
Re:
The Moody Foundation
Dear Mr. Dibrell:
This refers to your two letters of September 19, 1966,
addressed to Mr. Thomas R. Sullivan, Vice President of the Federal
Reserve Bank of Dallas, requesting an administrative determination by
the Board with respect to the status of the Moody Foundation ("the
Foundation") under the Bank Holding Company Act as amended July 1, 1966
("the Act").
After careful consideration of the facts presented and of the
Position advanced on behalf of the Foundation, the Board has concluded
that, in the light of the provisions of the Act, the Foundation is a
bank holding company under the Act, on the basis of its direct and
indirect ownership or control of 25 per cent or more of the voting
shares of two or more banks.
The facts, as presented in your letter, show that the Foundation is a "company" (a fact conceded by you); that it owns 123,951 out
of 250,000 shares (49.6 per cent) of the Moody National Bank of
Galveston, Texas ("Moody National") and has the right to vote an
additional 626 shares. On this basis, Moody National is a bank subsidiary of the Foundation. In addition, Moody National, through its
100 per cent owned subsidiary, the Galveston City National Corporation,
indirectly owns or controls 4,999 of the 20,000 outstanding shares
(24.99 per cent) of the stock of the Bank of Galveston, National
Association ("Bank of Galveston"). The Moody National Bank Employees
Pension Plan Trust ("Pension Trust"), which is administered by Moody
National as trustee, owns 54 shares (.27 per cent) of the stock of
Bank of Galveston. In this connection, your attention is directed to
Louis J. Dibrell, Esq.
-2-
section 2(g)(2)(C) of the Act providing that shares controlled by
trustees for the benefit of employees of a company shall be deemed to
be controlled by such company. Thus, on the basis of Moody National's
indirect ownership or control of 24.99 per cent and an additional .27
per cent of the stock of the Bank of Galveston, it is concluded that
the Bank of Galveston is a subsidiary of Moody National. By virtue of
the provisions of section 2(g)(1) of the Act providing that shares
controlled by a subsidiary shall be deemed to be controlled by the
parent, it follows that the Bank of Galveston is a subsidiary of
the Foundation.
In addition to the above described ownership and control of
bank shares, you have stated that the Foundation owns an undivided one
half partnership interest in W. L. Moody and Company, Bankers, a private
unincorporated bank. It appears to the Board that a private bank is a
"bank" within the definition of that term in section 2(c) of the Act,
if it is an institution that accepts demand deposits; also that it is a
bank within the meaning of that term as used in section 2(a) of the Act.
On the basis of the foregoing, the Board concludes that the
Foundation is a bank holding company under the Act, and will be required
to register as such pursuant to section 5(a) of the Act, and to comply
with all other requirements of the Act. In the latter regard, your
attention is directed particularly to sections 3 and 4 of the Act.
For your convenience, copies of the Board's Registration Statement,
Form F.R.-5, are enclosed. Inasmuch as registration is not required
of the Foundation before the latter part of December, the Board finds
unnecessary, at this time, any action on your request for an extension
of the time for filing the Foundation's Registration Statement.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
Enclosures
411
Item No. 4
11/2/66
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
S-2009
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
November 2, 1966.
Dear Sir:
This letter consolidates the Board's instructions with respect
to applications by individual member banks for permission to carry
reduced reserves, and is intended as a convenient reference to be used
with Section 19 of the Federal Reserve Act and the Board's Regulation D
for handling such applications. The Board's letters of August 9, 1946
(S-928, F.R.L.S. #6050) and July 314 1959, are hereby superseded.
The Board will generally accept size alone as indicative of
character of business in approving applications for reduced reserves
from banks with demand deposits of not more than $25 million. Accordingly, in such cases no other information need be submitted unless the
Reserve Bank feels there are unusual circumstances that should be
brought to the Board's attention. When applications are submitted from
banks with demand deposits of more than $25 million, it would be helpful
if, in addition to such other data and comments as your Bank may deem
desirable to submit with its recommendation, the following information
With regard to the subject member bank is furnished the Board:
1.
2.
3.
4.
5.
6.
7.
8.
9.
Amount of total assets.
Amount of total deposits.
Amount of demand deposits.
Amount of time deposits.
Identification, by broad classes, of depositors
and borrowers.
Number, amount, and activity of correspondent
bank accounts.
Balances due from banks.
Nature and extent of competition with banks not
eligible for reduced reserves.
Volume of debits against deposit accounts, and
turnover ratios, in comparison with other banks
in the same city.
-2-
10.
11.
12.
411'
Average ratio of excess reserves to required
reserves.
Activity in the markets for Federal funds,
Treasury bills, bankers' acceptances, and
certificates of deposits, and use of credit
facilities of the Reserve Bank in maintaining
reserve position.
Ratios to total loans of commercial and
industrial loans, loans to brokers and dealers
in securities, loans to nonbank financial
institutions, and consumer loans.
The situation with respect to each bank that has permission to
carry reduced reserves should be reviewed at least annually, upon the
completion of the examination thereof if it is a State bank and upon
receipt of the first report of examination in each calendar year if it
is a national bank. Upon completion of such review, if your Bank is of
the opinion that the permission
to carry reduced reserves should be
revoked or that it is a borderline case, appropriate information concerning the bank should be submitted to the Board together with your
Bank's recommendation. However, if your Bank is satisfied that the
permission to carry reduced reserves should be continued, it will be
s ufficient if a statement
to that effect, together with the memorandum
reviewing the bank's situation, is placed in the Reserve Bank's files.
During the period between the reviews provided for above, the
Board would also appreciate information with respect to any change in
the character of a bank's business which your Bank feels might warrant
revocation of the permission to carry reduced reserves, including the
establishment of an office that
brings the bank into significant
competition with banks not eligible for reduced reserves.
In the absence of permission to carry reduced reserves, a
member bank must carry the reserves of a reserve city bank if its head
clfice or a branch is within the city limits of a reserve city. A
member bank in process of organization
in a reserve city, or a member
bank
outside of a reserve city which establishes or acquires an office
thin a reserve city, or which is brought therein through a change in
the boundaries of the city, should be promptly notified of the higher
reserve requirements in order that it may take the necessary steps to
maintain the prescribed reserves and, if appropriate, make application
ir reduced reserves.
n
Very truly yours,
Kenneth A. Kenyon,
Assistant Secretary.
10 THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS.
1118
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 5
11/2/66
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
November 2, 1966
Mr. H. Edward Hemmings, First Vice President,
Federal Reserve Bank of San Francisco,
San Francisco, California. 94120
Dear Mr. Hemmings:
In accordance with the request contained in
your letter of October 25, 1966, the Board approves
the appointments of Robert N. Goff, Wilbert M. Nylander,
William T. Speer, Jr., and James W. Stacey, at present
assistant examiners, as examiners for the Federal Reserve
Bank of San Francisco, effective January 1, 1967.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
119
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 6
11/2/66
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONOCNCIC
TO THE •OARCI
.44L
REst.
•......
November 2, 1966.
Mr. Leland M. Ross, Vice President,
Federal Reserve Bank of Chicago,
P. 0. Box 834,
Chicago, Illinois.
60690
Dear Mr. Ross:
This acknowledges your letter of October 13, 1966,
enclosing a memorandum request from Vice President Baughman of
your Bank's Research Department requesting that Mr. Peter Bacon,
a research fellow employed in Mr. Baughman's department, be given
access to reports of examination of Fidelity Trust Company and of
Fletcher Trust Company, both of Indianapolis, at dates set forth
in Mr. Baughman's memorandum. Mr. Baughman states that Mr. Bacon
seeks access to these reports in aid of his preparation of a
doctoral dissertation dealing with bank mergers in the Indianapolis
area. Mr. Baughman offers assurance that the staff of the Research
Department will have ample opportunity to review Mr. Bacon's dissertation as it is being developed and prior to its submission to
Indiana University.
The Board authorizes Mr. Bacon's access to the reports of
examination identified in Mr. Baughman's October 11 memorandum, it
being understood that Mr. Bacon's study will be limited to the
reports so identified. In view of Mr. Bacon's particular interest
in information pertaining to the management and ownership of the
banks in question, and in the type and extent of affiliation of
these banks with other banks, the Board views as extremely important
the manner in which Mr. Bacon treats of the information to which he
will have access. Accordingly, it is assumed that appropriate
personnel of your Department and your Bank's Research Department will
take all steps reasonably calculated to assure the proper handling
and treatment of this information.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
4120
BOARD OF GOVERNORS
Item No. 7
11/2/66
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
November 3, 1966
Mr. John L. Nosker, Vice President,
Federal Reserve Bank of Richmond,
Richmond, Virginia. 23213
Dear Mr. Nosker:
In accordance with the requests contained in
your letters of October 28, 1966, the Board approves the
appointments of Lawrence P. Nuckols and Francis F. Falls
as assistant examiners for the Federal Reserve Bank of
Richmond, effective today.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 8
11/2/66
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE •OARD
•41,41-
November 3
1966
Mt. 0. O. Wyrick, Vice President,
Federal Reserve Bank of St. Louis,
St. Louis, Missouri. 63166
Dear Mr. Wyrick:
In accordance with the request contained in
your letter of October 27, 1966, the Board approves the
appointment of Paul R. McAllister as an assistant examiner
for the Federal Reserve Bank of St. Louis. Please advise
the effective date of the appointment.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
@FedFRASER