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Minutes for October 22, 1958 Members of the Board To: From: Office of the Secretary Attached is a copy of the minutes of the m on Board of Governors of the Federal Reserve Syste the above date. ment It is not proposed to include a state of set this in es entri the with respect to any of red to minutes in the record of policy actions requi al Feder the of 10 on be maintained pursuant to secti Reserve Act. d to Should you have any question with regar e advis will you if d the minutes, it will be appreciate present the Secretary's Office. Otherwise, if you were at the meeting, please initial in column A below to were indicate that you approve the minutes. If you to below B n not present, please initial in colum indicate that you have seen the minutes. A Chin. Martin Gov. Szymczak Gov. Vardaman 1/ Gov. Mills Gov. Robertson Gov. Balderston Gov. Shepardson 1/ Shepardson's memoIn accordance with Governor minutes are not randum of March 8, 1957, these for initial. man being sent to Governor Varda Minutes of a meeting of the available members of the Board of Governors of the Federal Reserve System on Wednesday, October 22, 1958. The meeting was held in the Board Room at 10:00 a.m. PRESENT: Mr. Balderston, Vice Chairman Mr. Szymczak Mr. Shepardson Sherman, Secretary Kenyon, Assistant Secretary Fauver, Assistant Secretary Hackley, General Counsel Masters, Director, Division of Examinations Solomon, Assistant General Counsel Chase, Assistant General Counsel on Holahan, Supervisory Review Examiner, Divisi of Examinations , Special Counsel Powell Mt. Mt. Mr. Mt. Mt. Mt. Mt. Mt. Mt. Continental Bank case. Messrs. Hackley and Solomon were present with the understanding that they would not participate in the discussion hut would be available for the purpose of advising the Board with regard of to Procedural matters as opposed to matters involving the prosecution the case. procedural problem Mr. Powell stated that he wished to discuss a that had arisen because of certain decisions handed down by the courts °I' the United States since January 1958. The problem related to the d'emand made by Respondent through its Counsel to inspect the confidential ental Bank and Trust sections of reports of examinations of the Contin e°mPany made as of March 1956 and October 1956. The open sections of and shortly these reports were introduced as exhibits in the proceeding atter the hearing started Counsel for Respondent made the demand for 1. 3". 10/22/58 71 .4 Of, -2- Permission to inspect the confidential sections. The request was referred by the Hearing Examiner to the Board which ruled adversely, stating that for reasons of public policy, including the necessity for maintaining the confidentiality of this kind of information, Respondent should be examination." denied the confidential sections of these two reports of Mr. Powell said that the reports of examination contained the basic facts concerning the condition of the bank on which the whole case was being on the facts in tzied, and that many pages of expert testimony focused those two reports. been carried The proceeding, he said, could not have on without the benefit of the reports of examination and might have to be stricken from the missed if the reports and testimony thereon should be reCord. court decisions to Mr. Powell then presented a summary of the Which he had referred. that the doctrine In effect they appeared to hold States, stated by the Supreme Court in Jencks v. United 353 U.S. 657, is civil proceedings 4PPlicable not only to criminal proceedings but also to 41111- administrative hearings. Supreme Court held In the Jencks case the Government refused to th4t the criminal action must be dismissed if the Permit the accused to inspect confidential reports in the Government's testimony of witnesses -Qblon touching upon the subject matter of against the accused. memorandum would be It was understood that copies of Mr. Powell's n14cle available to all of the members of the Board. 14 the Board's files. A copy has been placed 302 10/22/58 -3- of Respondent Mr. Powell expressed the view that the position in this matter would probably be upheld by the Court of Appeals of the to that Court. District of Columbia if the case should be appealed referred to by Mr. Mr. Masters stated that if the decisions the extent that Powell would have the effect of shattering precedent to a completely aPParently would be the case, it might be necessary to take al sections of new position with respect to the disclosure of confidenti of such sections to examination reports and also to reconsider the value bank supervisory authorities. nations He said that the Division of Exami Continental Igas not concerned so much about the specific request made by as about the precedent that would be created. case was such Mr. Powell stated that the time schedule in the be satisfactory. that a decision by the Board some time next week would matter would be taken Mr. Balderston then stated to him that the there had 1110 formally by the Board when a quorum was present arvi after memorandum concerning the court been an opportunity to read Mr. Powell's decisions. Because of a question that had been raised during the nations would discussion, it was understood that the Division of Exami Bank of San ascertain whether it is the practice of the Federal Reserve reports of examination I'llancisco to furnish the confidential sections of authorities. Utah State member banks to the Utah State banking meeting along with all of the Mr. Powell then withdrew from the Kenyon, and Fauver. Members of the staff except Messrs. Sherman, reappointment. Eligibility of director for Governor Balderston Erickson of the Federal Reserve l'ePorted an informal inquiry from President 3029 -4- 10/22/58 reappointment as a Class C Bank of Boston concerning the eligibility for current appointment expires at the director of Mr. Harvey P. Hood, whose ctor from January 1, 1951, Mr. Hood served as a Class B dire began his service as a to December 31, 1955, and on January 1, 1956, he cated to Governor Balderston that Class C director. Mt. Erickson had indi ible, would help to meet a reaPpointment of Mr. Hood, if this were poss the number of changes in the Problem of lack of continuity resulting from end of 1958. 'Position of the Board of Directors. aled that Mr. Hood could A review of the facts of the case reve the Board's not be considered eligible for reappointment under either provisions contained in current policy of rotation of directors or the understood that the pending Financial Institutions Act, and it was rmally. Governor Balderston would advise Mr. Erickson info The meeting then adjourned.
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