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t1 3,R4 A meeting of the Executive Committee of the Federal Reserve Board 1748 held in Washington on Thursday, October 13, 1932, at 4:00 p. ra. PRESENT: Governor Meyer I:r. Haralin Mr. Magee Mr. flOrrill, Secretary 1.1r. McClelland, Assistant Secretary Mr. Harrison, Assistant to the Governor Wyatt, General Counsel Paulger, Chief, Division of Examinations Siems, Federal Reserve Examiner. The Commi, following matters were considered and acted upon by the Telegram Reserve dated October 13, 1932, from the Chairman of the Federal Bank of Richmond advising that the board of directors, at its meeting Illede no change in the bank's existing schedule of rates of discount 4114 D4rchase. Without objection, noted with approval. aPhi0 7e1egr reply, approved by five members of the Board, to a tele- aerve 3 'tecl October 13, 1932, rora Deputy Governor Rounds of the Federal Re- °r New York requesting authority for the renewal, for a period " v;11(109 --v 8) with interest at the rate of 5 1/2 per annum, of the ad- the 8110unt of .:,;5,000 made by the teederal Reserve Bank of New York, '4e(31%laro Act with the provisions of section 10(b) of the Federal Reserve ) airie nded" Under authority granted in the Board's telegram of Ally 13, to the /101, Atlanta National Bank, Atlanta, New York; Deputy Governor ti 8t4--11 ( ; ) that the Ftnnational bank has advised that the conditions which rise 44_ to Ike ly o riginal loan have not improved and has requested a renewal. et tAa wlat the Board authorizes the renewal of the advance as -eatea. Approved. .033r:3 f 10/13/32 _ -2- Report of the Committee on Salaries and Expenditures on a letter dated October 5, 1932, from De-Duty Governor Heim of the Federal Reserve Bank ,.. "as City requesting approval of a change in the personnel classification Plan of the Omaha branch to provide for the new position of "Clerk", with 4 eale 17 range of .)l,901 to .::2,400 per annum, in the Loans, Rediscounts and Or 4e°oPtan_ces Department; the Board's Committee recomilending approval. Approved. Letter to Assistant Federal Reserve Agent Fletcher at the Federal sve Bank of Cleveland referring to his reply of October 5 to the Board's lett, r Or SepteMber 28, 1932, with regard to the method of reporting the liabil. ItY of the Central Trust Company of Cincinnati, Ohio, on certain e state Mortgage bonds sold by the Pearl I7arket Bank and Trust Company to ,vs customers Prior to its absorption by the former institution. The 44,0. 11c41r°8 letter stated that it is understood that bonds in the form inclosed the assistant Federal reserve agent's letter, together with other bonds bY the Pearl Earket Bank and Trust Company under similar conditions, 8°1(1 bY the bank to its customers with its express or implied guaranty 1)EtY111811t and that it did not issue its own obligations against the pledge ENQII bonds as security, and that in the circumstances the amount of 1.1"11ity asSurfle1 by the Central Trust Company on the bonds in question 44°Illclbe r eported by the company as a contingent liability in Schedule C cr kko condition report form 105. Approved. 1,ez I A --,qeration was then given to a Inemorandtun addressed to the Fed- erVa .14 -— oard tTI,14111 by Er. R. F. Leonard, Federal Reserve Examiner, copies ill'el1101181Y had been furnished to the members, with regard to the :3 6 10/13/32 e:ce'Dlinati°n by representatives of the Comptroller's office, in which VEr. Le°1141'd Participated, under the direction of Er. Drinnen, of the trust cleirtraent of the Continental Illinois Bank and Trust Company, Chicago, him ' 18) which was made at the request of the Board in connection with the 414.iction filed by the bank on behalf of the Continental Illinois National Ettuak gaci Trust Company for permission to exercise the fiduciary powers elatuote rated in section 11(k) of the Federal Reserve Act. 11-t. Paulger reported that, in accordance with the request of the he arrived in Chicago on Eonday, October 10, in connection with the e:"uqinati°n 'which was begun on Thursday, October 6, and completed on TUesday, °0tober 11. He outlined the general scope of the examination and stated thelt en 4 --ns4 deration was given to the types of securities held in the differac trust counts, particularly the so-called Insull securities, the bank's °,4 stec, certain municipal securities, and real estate mortgages, investIlle ML it which by the trust department night be subject to criticism. He 4tated that a careful check was made of the procedure followed at the ll'eastit time in the determination of investments for the various trusts and the Illethod used in reviewing the securities purchased. He expressed the (51111°11) based on information obtained during the examination and a subsequent Nitarence with the the department, that the management and officers of N4Qies Of the department have been materially improved during the past YeEtr or raore. He stated that the established system for auditing the tiQ%114 t8 is satisfactory, and that the examiners who made the examination tha Z1E3 a -Illech4nical operations of the department feel that it is well conducted. €'1'eed with the opinion expressed in Er. Leonard's memorandum that the orQy M4J°1% cr iticism that could be made was that to SOMB extent, in cases 10/13/32 illwhioh the discretion was vested in the trust department, the management '1.4M have enforced a policy of disposing of certain investments, accuired "various trusts, which might now be held to be subject to criticism, even th°ugh the trust department was not responsible for their purchase, bit stated that the officers of the department felt that, in view of all the circ umstances involved in the situation, they could not have enforced 84c4 a Policy. Be stated that he was advised that in many cases such action had been 84gested to co-trustees and beneficiaries but had not met with favorable reception. Paulger also stated that the officers of the qeDartlI)ent had Promised to correct the criticisms listed in the report of /lation. Stems stated that he had gone over the report of the examinati°1171111ch was furnished the Board by the Comptroller's office today, and he 18 CT the opinion that the information set forth therein substantiates he etatenient made by the examiner in the confidential section of the re11°11 that) viewed as a whole, it 414 aelative, Dteze believed the trust affairs reflect an exPert management and that the management is guided by con- ethical and practical Principles. The "'*itite is Secretary stated that the Acting Comptroller had recommended that the trust powers be granted by the Board. go lleral discussion ensued during which the members of the Board 14 view of the infoiniation before them, expressed their willing- e4a tO '1)131 ' c)ve the application filed on behalf of the Continental Illinois 11Doll Baxac and Trust CompanY- 14t. l'et11111 reported that he had communicated over the telephone with The Secretary then left the meeting and and had outlined to him the information presented at the meeting 338 10/13/32 -.5.- 41gcl the favorable attitude of the members present, and that flr.Miller had reqUested that he be recorded as approving the application. The Secretary was then authorized to send the following telegram to the Federal Reserve Agent at Chicago: "Please advise The Continental Illinois Bank and Trust C0111PanY that, effective if and when it is converted into , z! national banking association and is authorized by the onptroller of the Currency to col:nonce business as the Continental Illinois rational Bank and Trust Company of a4icago, Illinois, the Federal Reserve Board approves the apPlication filed by it on behalf of such national bank for ; 3ellMission to act, when not in contravention of State or 0Ell law as trustee, executor, administrator, registrar of stooks and bonds, guardian of estates, assignee, receiver, c mamittee of estates of lunatics, or in any other fiduciary c4PacitY in which State banks, trust companies or other corporations which come into competition with national banks Zfe Permitted to act under the laws of the State of Illinois, exercise of all such rights being subject to the proJ,310118 of the Federal Reserve Act and the regulations of a"s Reserve Board. The Board's approval of the 0.1p3lcation has been given on the condition that the Board : 0 Lurectors of the national bank shall, after the conversion 4346, The Continental Illinois Bank and Trust Company into a thti°nal bank becomes effective, pass a resolution ratifying : pe action taken by the company in making application for ssion to exercise trust powers on behalf of the national and it is requested that a certified copy of the resoluix:" adopted by the board of directors of the national bank forth. "connection be forwarded to the Federal Reserve Board cel..1.1t8 records as soon as possible. Formal permit and irisd copies thereof requested by counsel for bank will be-; '-0rwarded as soon as Comptroller issues authorization to vMmence business." Thereupon the meeting adjourned. l(N(;-trut, 71,w) Secretary. 4pAziove
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