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1695 Minutes of actions taken by the Board of Governors of the Peda -1L1 Reserve System on Tuesday, November 26, 1946. The Board tet in the Board Room at 10:40 a.m. PRESEIT: Mr. Eccles, Chairman Mr. R.i.:risom, Vice Chairman Mr. Draper Yr. Carpenter, Secretary Sherman, Assistant Secretary Mr. Thurston, Assistant to the Chairman Mr. Vest, General Counsel Mr. Townsend, Assistant General Counsel stated in the minutes of October 30, 1946, Mr. Vardaman l'41s absent on official business. This meeting was called for the purpose of discussing (111"ti-°n8 raised and suggestions made by representatives of inde13etiderlt bankers associations, bank holding companies, and others in e°11ection With the draft of bank holding company bill (H. R. 6225), Altch - wa.8 sent to the Chairmen of the banking and currency committees the House and Senate with the Board's letter of April 23, 1946. The reason for the discussion was to determine the form of ti0r1 leg414 to be proposed to the Congress by the Board at the ap- 111‘°11qate and which, if any, of the suggestions as to changes the bill should be adopted. kqerences on Mr. Townsend referred briefly to his the matter with various representatives of the inde13etkiellt bEzkers associations and bank holding companies during the kaara all(i the background for all of the suggested changes in the Wa reVie-vied. 1696 - For reasons stated during the discussion, the following conclusions were unanimously agreed upon, with the understanding (1) that if Messrs. Vardaman and Evans held other views on ..ny of the conclusions, the matter would be couoidered again; and (2) that the existing bill (H. R. 6225) would be revised to incorporate the changes agreed upon: 1. A provision which would prevent the creation of, or further expansion of,,bank holding companies should not be included in the bill. 2. The Board should have some discretion to determine when a company was a bank holding company or when a bank or other organization was affiliated with a holding company, rather than to provide for such determination on the basis of a rigid formula. 3. The bill should not prohibit bank holding companies from owning stock of banks in other states. 4. No bank should be permitted to make a loan on or invest its funds in the capital stock of bank holding company of which it was a subsidiary. 5- No bank in a holding company group should be permitted to make a loan on or invest its f al: fc171s the capital stock of any other suba in the group. 6. The provision in the bill with respect to 1°ans by a subsidiary bank to any other concern ill the holding company group on sound assets Other than the capital stock of such concerns should be retained as no objection had been offered to it. 7- Section 6(c) of the bill should not provide that the Board would have authority to disapprove the acquisition of all or substantially all of the assets of a bank by a bankSubsidiary of a holding company if such ,.°(:luisition had been approved by (1) the 'omptroller of the Currency if the acquiring °ank was a national or district bank, or (2) jt_he Federal Deposit Insurance CorporatIon if lupe acquiring bank was other than a national ank, district bank, or State member bank. 1_697 11/26/46 —3— 8. The Board should not propose an exemption from the capital gains tax on stock of a cor— poration oned by a holding company the Stock is distributed in kind pursuant to the provisionc of section 5 of the bill, it being understood that if such an exemption is pro— posed when the bill is before Congress, the Board would express its views on the proposal at that time. 9. The reserve required to be accumulated by a holding company should be in terms of a per— centage of the par value, rather than the book Value, of bank shares oaled by the company, and should consist of marketable assets rather than of only cash and Government securities. At this point Messrs. Vest and Townsend withdrew from the eet 3.4d the action stated with respect to each of the matters Ilel'illafter set forth was then taken by the Board: L emorandum dated November 221 1946, from Mr. Bethea, Director Qrthe Division of Administrative Services, recommending the appoint— 14e4t or 14rs. Helen Boyer :sorthen as a stenographer in that Division vIlth 134eic salary at the rate of 2,168.28 per annum, effective as °t the date wa.,c" she enters upon the performance of her duties upon' 11 4tel' having passed the usual physical examination. The memorandum .k4es qated that Mrs. Worthen was a member of the Civil service lietirezttent and Disability Fund and would remain in that fund. Approved unanimously. MeMorandum dated November 22, 1946, from Mr. Bethea, Director r th e 11)1.,-; . vj-slon of Administrative Services, recommending the appoint— or Geo rge V. Psomos as a cafeteria helper in that Division, on a 16. 11126/46 -4trarY indefinite basis, with basic salary at the rate of $1,822.00 Peralirurn, effective as of the date upon iihich he enters upon the Pel'f()rrnance of his duties after having passed the usual physicaJ ec4killat1on. that Ur. The memorandum also stated that it was contemplated Psomos -Aould become a member of the Federal Reserve retire- 411.1 sYstem. Approved unanimously. Letter to Mr. Young, President of the Federal Reserve Bank ot 03, -4'eag0, reading as follows: "This refers to Mr. Diercks' letter of November 14 eontalning • • 13n your recommendation that the Board revoke the heretofore granted The Halsted Exchange Na.671141 Bank of Chicago, Chicago, Illinois, to maintain same reserves against deposits as are required to be Zintained by reserve city banRs. It is noted that the of the bank recently has been changed to 130 etaTL LaSalle Street, in the heart of Chicago's finanL --,district, and that its title was changed on April 1-946 to The Exchange National Bank of Chicago. 8io "In the cirCumstances and pursuant to the provigoans of Section 19 of the Federal Reserve Act, the b rci revokes the permission heretofore granted the a8 t° maintain the saue reserves against deposits etr:re required to be maintained by reserve city banks, per;Tve With the first weekly reserve computation beginning after the date of this letter. ?lea acIvis the member bank of the Board's action '.18 matter." Approved unaniriously. litem -°randum dated NoveMber 21, 1946, from Messrs. Parry and Th 014, Dir ecc'ors of the Divisions of Security Loans and Research the respectively, requesting approval, for reasons stated taeMorandum, for continuation of the annual Retail Credit Survey 99 11A16/46 —5— cover the year 1946. The memorandum also stated that the distri— but;4.0r1 f his r-, ort is expected to approximate that for the 1945 SurveY, but that cost of printing the 1946 Survey 111 probably • eceee(1 the 1945 figure of $1,187.15. Approved um. imously. Thereul)on the meeting adjourne Secretry. Chairman.
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