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Minutes of actions taken by the Board of Governors of the Pederal Re erve System on Thursdwi) October 25, 1951. PRESENT: Mr. Martin, Chairman Mr. Szymczak Mr. horton Mr. Sherman) Assistant Secretary Mr. Kenyon) Assistant Secretary Memorandum dated October 23, 1951, from Mr. Murff, AssistLnt Seeretary of Vie Board, recommending an increase in the Miscellaneous classification or the 1951 budget of the Board Members Section in the of 0,000 in order to provide for salaries and traveling expenses °fIlez3ring examiners temporarily borrowed from other Government agencies 001xlectIon with administrative hearings as a part of the enforcement 1)r0cedure under Regulation Consumer Credit. Approved unanimously. Memorandum dated October 23, 1951, from the Personnel Committee l'eeorfirriending for reasons stated therein that the Board authorize the CtlVe Dision heads, with the consent of the Budget Officer, to lae.4 cemnitments against Division budgets for the following year for lie Purchases where, in the opinion of the Budget Officer, the 44:1'eCete mounts involved bear a reasonable relationship to the el4'1'ellt Year's budget for the particular classification of expense; procedures, because of recent changes in the Board's budgetary the b °ard reaffirm that portion of its action or December 20, 1939, ' ei it approved unanimously a recommendation that it: ' 10/25/7)1 -2- authorize the respective division heads, with the consent of the Budget Officer to make expenditures during 1940 and in subsequent years beyond the amount authorized in the approved non-personal services budget for the division for the particular year to an amount not exceedinf,; 10 Per cent of the original budget authorization for any individual classification, provided the aggregate authorization for non-personal services for the division will not be exceeded as a result of such additional expenditures. The latter recommendation contemplated that in the case of any major expenditures not contemplated in the original budget and all expenditures which would exceed the proposed 10 per cent limitation, it would be necessary, as in the past, for the head of the division concerned to submit a recommendation to the Board for an additional authorization." Approved unanimously. Memorandum dated October 23, 1951, from the Division of 11"sonnel Administration, recommending for the reasons stated therein tIlat the Board's donation to the Reserve Board Club be •increased from to *1,250 per year, effective with the calendar year 1952, and tll'A the lieserve Board Club not be charged for the use of the tele111°r.le in the Club library. Approved unanimously. Letter to Mr. Weigel, Secretary of the Federal Reserve Bank Of , 't. Louis, reading as follows: "Reference is made to your letter of October 19, 1931, requesting the Board's approval of the retention ,Active service through June 30, 1952, of Mr. Clay Childers. ".or the reasons outlined in your letter the Board Of Governors approves the payment of salary to Mr. Childers as Assistant Manager of the Little Rock Branch at the rate of $5,000 per annum for the period December 1, 1951, through June 30, 1952, or at such other rate as may 10/2V71 -3- sulsequently be fixed by the directors and approved by the Board of Governors." Approved unanimously. Letter to Mr. aodgkinson, Chairman of the Federal Reserve Bank Of Boston, reading as follows: "Reference is made to your letter of October 16, 1951, requesting the Board's approval of the retention in active service through June 30, 1952, of Vice President hult. "For the reasons outlined in your letter the Board of Governors approves the payment of salary to Mr. Ellis G. Hult as Vice President at the rate of 46,00C per annum for the period December 1, 1951, through June 30, 1952, or at such other rate as may subsequently be fixed by the directors and approved by the Board of Governors." Approved unanimously. Letter to Mr. Slade, Vice President of the Barlk Federal Reserve of r, can Francisco, reading as follows: "In accordance with the request contained in your letter of October 22, 1971, the Board approves the desiE: /1ation of the following as special assistant examiners for icederal Reserve Bank of San Francisco: M. J. Coulam R. C. hunn" Approved unanimously. Letter to Mr. Roger Jones, Assistant Director Legislative t(ere rence, Bureau of the Budget, Lashington D. C., eading as follows: "This is in response to your communication of October 22, 1951, requesting an expression or our views the Enrolled Bill 11.R. '.)`()I, 'To penalt the Federal iviortr,Ige Association to infalce commitments to 1311rcha,se certain mortp_tires. -4"The purpose of the bill is to enable the Federal National Mortgage Association to enter into advance commitment contracts not exceeding 00 million outstanding b.t any one time with respect to certain mortgages under section 213 of the National Housing Act, as =ended, which the Federal Housing Commissioner has issued either a commitment to insure or a statement or eligibility prior to June 29, 1951. Not more than $3,c0,00o of such authorization would be available for such commitments in any one State. "The Board has been, and is, concerned about the inflationary effects of mortgage credit expansion and Particularly such expansion from the use of Federal funds, Which this bill would authorize. Lacking knowledge of the urgency of the specific situation the bill is designed to meet, however, the Board does not feel qualified to take any firm position with respect to its enactment." Approved unanimously. Letter to Mr. -Roger W. Jones, Assistant Director, Legislative Iference, Bureau of the Budget, Washington, D. C., reading as follows: "This is in response to your communication of October PP, 19)1, requesting the Board's comments on the enrolled enactment of a bill (H.R. 1672) for the relief Of the Bank of America National Trust and Savings Association. "It is the Board's understanding that the claim in the amount of $20,403.6) arose in connection with a conentered into by the War Department with the San Jose : 1lar1ufacturers, Incorporated, San Jose, California, during Ivar II. The Bank of America made a loan to the San u°2e Company which, under the V-loan program, was guaranteed UP to 3o per cent by the War Department. The loan was not Paid and 80 per cent of the loss was borne by the War Departlflent and 20 per cent of the loss was borne by the Bank. H.R. -1°72 would reimburse the Bank of America for its loss in the kmount mentioned above. "The Board of Governors has not previously had occasion to 4 consider or to report on this bin. It is not in a posion, therefore, within the limited time now available to f - le adequate consideration to the merits of the claim before ''uvising the President. -5Mowever, since the Federal Reserve Banks act as fiscal agents for the guaranteeing agencies in connection with the current V-loan program, the Board has a real interest in any action which may have a bearing on that program. Regardless of the merits of the claim in any p-trticular case, it seems quite likely that enactMent of a special statute, providing for payment by the Government to any financing institution of an amount over and above the percentage of the Government's guarantee, vould in all probability be used as a precedent with respect to other similar claims and, as a consequence, both the spirit and purpose of the program might be jeopardized." Approved unanimously. Letter to Mr. Olson, Vice President of the Federal Reserve Bank "CI-ileac°, reading as follows: %e have received your letter of October 18, 1951, inquiring whether the Johnson Nursing home of Joliet, Illinois, could be considered as a hospital exempt from Regulation X under section 2(r)(3). Your letter states that this nursing home is licensed by the Division of Eospitals and Chronic Illness of the Department of Public Health of the State of Illinois, and that patients consist of aged persons who have suffered some form.of disability, most of whom are bedridden, requiring nursing and medical care. "As you know, footnote 10 to section 2(k) of Regulation X specifically defines 'rest homes' as nonresidential structures if more than one-half of the floor space of the structure consists of units which do not contain kitchen facilities or space designed for kitchen facilities. Inasmuch as many 'rest homes' are merely boarding houses for aged, infirm, or convalescent persons providing a form of nursing service as a means of inducing their Patronage, it has been our belief that we should ordinarily not classify such institutions as hospitals exempt fl'om Regulation X. There are, however, some nursing homes 14hich do provide a complete medical and nursing service f°r cases of chronic invalidism, which are similar to 10/25/51 "sanitariums and hospitals and quite properly could be Classified as hospitals exempt from the regulation. Since the granting of an exemption for this type of institution may cause other proprietors of nursing homes which do not provide the same complete medical and nursing service indicated in your letter to apply for exemptions, in general, it would seem that great care should be exercised in determining the extent of the in-patient hospital services afforded by the institution before classifying a rest home as a hospital. "It would seem, therefore, that if you'believe that the Johnson NursinG llone provides in-patient services and accommodations similar to a hospital jt would be exempt from the terms of Regulation X." Approved unanimously.
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