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15 Minutes of actions taken by the Board of Governors of the 'ela Reserve System on Monday, October 16, 1950. PREsENT: Mr. Mr. Mr. Mr. Mr. McCabe, Chairman Szymczak Evans Norton Powell Mr. Carpenter, Secretary Mr. Sherman, Assistant Secretary Mr. Kenyon, Assistant Secretary eclerea Minutes of actions taken by the Board of Governors of the Reserve System on October 13, 1950, were approved unanimously. Letter to Mr. Shepard, Chairman and Federal Reserve Agent of " 44 Reserve Bank of Minneapolis, reading as follows: ft n accordance with the request contained in Mr. Gl'enon's letter of October 10, 1950, the Board of ,(17ernors approves, effective October 16, 1950, the , 1 111ent of salaries to the following members of the ecieral Reserve Agent's staff at the rates indicated: Annual Name Title M. Salary • Anderson Alternate Assistant Federal Reserve Agent $4,250 S • Perrian Alternate Assistant Federal Jo Reserve Agent 5,500 hia Johnson Alternate Assistant Federal Reserve Agent 5,100" Approved unanimously. ot Letter to Mr. McLarin, President of the Federal Reserve Bank "144ta, reading as follows: la accordance with the suggestion contained in Jb.:4- letter of October 9, 1950, the Board extends to nis4411e-ry o 11xErt ,-, 1951, the time within which the Merchants tierai.„rship& Savings Bank, Kenner, Louisiana, may accomplish -v . Approved unanimously. 10/16/50 -2Letter to Mr. Mangels, First Vice President of the Federal Reserve 8ank of San Francisco, reading as follows: 1 "This refers to your letter of September 221 t91,50, requesting the Board's opinion as to whether ell !Peoples Bank, Lakewood Village, California, may branches at South Street and Bellflower Cu-evard and South Street and Lakewood Boulevard, °8 Angeles County, without the Board's approval. 4 The opinion of your Los Angeles branch is a°ted to the effect that the proposed locations Ifithin the 'same unincorporated area' as the head.office of the bank. It is assumed by this Of Meant the same unincorporated town or village i4 Los Angeles County and, with this understandit is the Board's opinion that the law permits a,e establishment of these branches without 4r°7a1 by the Board." Approved unanimously. retititia Tel egram to the Presidents of all Federal Reserve Banks, Ets r0llows: rsp„:In response to a number of informal inquiries 7g policies for the employment of additional tre;°Iinel required in connection with the adminisVojfa of Regulation X, the Board of Governors slIggest the following: (1) Additional fulltj °fficers or employees be handled in accordance slat the established procedures; (2) Part-time conor advisers may be employed on a per diem siaes ' The Board is prepared to give prompt con13artration to recommendations for the employment of cles:le consultants outside of the established ezet:'lloation plan, if necessary, at rates not to : exl C1 $50.00 per day, plus actual transportation ezcellses and per diem in lieu of subsistence not to ir $15.00; (3) Members of advisory committees, . y IllaY be reimbursed on the same basis presently toar'cable to directors of the Banks. Please advise tor clAf3f anY arrangements set up in your district auvisory committees." Approved unanimously. 10/16/50 -3Telegram to the Presidents of all Federal Reserve Banks, lie4cling as follows: "The following questions have been received i le„.cTic_erning Statements of the Borrowers in connection ""n Regulation X: „1. , t.i.uestion: A Registrant makes a loan to a ' Ill r4Mge Company on a note secured by a pledge of Collateral consisting of real estate mortgages, in' D Ilcling some subject to Regulation X. May the ;egistrant rely upon a statement by the mortgage !, 131PanY that all of the pledged mortgages which are "40Ject to Regulation X conform with the requirements a the regulation? Must the Registrant procure m coDY of the Statement of the Borrower which the R°rtgagor signed, pursuant to section 4(c) of v!gulation X, with respect to each pledged mortgage ' ich is subject to Regulation X? yiA Answer: Section 4(a)(5) of Regulation X proi "es that no Registrant shall lend on any credit vIlirsitrument evidencing real estate construction credit -1 ch is subject to and not exempt from the regulation, 1 .` 13;'ess the terms of such credit conformed with the gjnsions of the Supplement to the regulation when th'" credit was originally extended, or conform at Ree ,,time of such loan. In the case described, the mow-strant may not rely upon the statement by the koll:!gage company to establish that the pledged vii:,6age6 which are subject to Regulation X conform hovli the requirements of the regulation. The Registrant, ever, may rely upon a signed statement accepted vhigood faith in which the mortgage company states evirelh of the pledged mortgages do, and which do not, ' ence real estate construction credit subject to ae on X; and in determining whether a mortgage rezi li is subject to Regulation X conforms with the Bt' a-;:ltion, the Registrant may rely upon the facts siw1 ' ,- in a copy of the Statement of the Borrower Etc;:e . bY the mortgagor and which the Registrant , 1d,s in good faith. 1004 Question: A Registrant makes an unsecured to b t° a mortgage company, the proceeds of which are 102I by the mortgage company to make real estate theincluding some subject to Regulation X. Must Registrant obtain any Statement of the Borrower. 1°116/50 "Answer: As described, the loan by the Registrant to the mortgage company is not an extension of real estate construction credit or a loan on credit instru!snts evidencing real estate construction credit. The , 11egistrant is required only to be satisfied, and mainrecords which reasonably demonstrate on their face, ellat the loan to the mortgage company is not real 111.! 8 4te construction credit. This requirement may be osi'bY the execution by the mortgage company of a t , atement of the Borrower of the kind described in first paragraph of section 4(c) of Regulation X i (1 the acceptance of the Statement by the Registrant -n good faith." Approved unanimously. Telegram to Mr. Strothman, Assistant Vice President of the el'eLl Reserve Bank of Minneapolis, reading as follows: or b "Re Your your wire October 11 concerning Statement of or under Regulations W and X. Our letter lihi2 t°ber 9 related to a Statement of Borrower sej:: a Registrant is required to obtain under ,11 4(d) of Regulation W. Such letter was not illt:_? laot--"u-ed to preclude the use of a rubber stamp i'n if it is clear on the face of the document : Ft, thaa borrower intended that his signature at !to the notation. ce 'The statement in our wire of October 10 contnag a stamped notation on the face of the borrower's 4or it- 14 connection with Regulation X related to a 1-0/1 in which a Registrant is not required to 0110.1 a Statement of Borrower and such a Statement tlerelY one method of complying with the requiretel : ree--;," that the Registrant be satisfied, and maintain 11.71e which reasonably demonstrate on their face, vhe; The.,,er the credit is real estate construction credit. Use of X a rubber stamp notation under Regulation ; course assumes the exercise of good faith by the ratit, and that the borrower will, in fact, 14,;s!„.. s11, 1, '"at he is making the statement contained in a notation." Approved unanimously. 1516 10/16/50 _5_ Memorandum dated October 16, 1950, from Mr. &off, Assistant co el, r -1, ecommending that in addition to the material previously s 8111)4Litted for publication in the Law Department of the October issue Of th the r xederal Reserve Bulletin there be included statements in °1101 attached to the memorandum with respect to the following: Consumer Credit Amendment to Regulation W Loan Guarantees for Defense Production National Bank Loan Limitations Approved unanimously.
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