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Minutes of actions taken by the Board of Governors of the Pecieral Reserve System on Friday, September 1, 1950. The Board met ill the Board Room at 3:05 P.m ' PRESENT: Mr. Mr. Mr. Mr. Mr. McCabe, Chairman Szymczak Evans Norton Powell Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. tOlai b kr. 81 411C1 qeserve Lac° Carpenter, Secretary Sherman, Assistant Secretary Morrill, Special Adviser to the Board Thurston, Assistant to the Board Riefler, Assistant to the Chairman Leonard, Director, Division of Bank Operations Vest, General Counsel Millard, Director, Division of Examinations Young, Director, Division of Research and Statistics Solomon, Assistant General Counsel Fauver, Administrative Assistant to the Chairman Shay, Assistant Counsel Fawley, Economist, Division of Research and Statistics el/i8, Assistant Vice President, Federal Reserve Bank of St. Ikr• Heath, Assistant Cashier and Assistant Secretary, Federal 13411k of Chicago, who were assisting the Board's staff temporarily 4ecti°4 with consumer credit activities, and Mr. E. M. Fisher, Cotetat ant to the Board assisting in connection with the regulation Of real estate credit, were also present. There were presented telegrams to the Federal Reserve Banks of elli4g°, St. Louis, Kansas City, Dallas, and San Francisco stating that the toar d al)Proves the establishment without change by the Federal Reserve 44 Fr ancisco on August 29, by the Federal Reserve Bank of St. Lokzi8 0 At1611" 30; and by the Federal Reserve Banks of Kansas City, -2Chicago, and Dallas on August 31, 1950, of the rates of discount and lairchase in their existing schedules. Approved unanimously. Mr. Leonard stated that the Conference Report submitted yesterda:Yafte -rnoon on the Defense Production Act of 190 contained a stateZellt on, vage 36 with respect to the regulation of consumer credit in- clicati lag that it was the intention of the Congress that loans against share accounts in savings and loan associations and savings accounts 14 savi 48 banks should not be subject to the regulation to be issued ty the 80ard. Be stated that this presented the question of the nature or the e4emPtion of such loans from the provisions of the Regulation. It vhi recommendation that the Board exempt from the terms of the at104 any credits which were secured by share accounts or savings 4cc0utts in savings and loan associations, savings or commercial 11444 'credit unions, and other similar institutions. Following a discussion, it was agreed unanimously that a provision along the lines suggested by Mr. Leonard should be included In the draft of regulation which the staff had been requested to prepare for consideration by the Board. There Iraft °r the be followed a discussion of the procedure for sending a regulation to the Federal Reserve Banks so that it might Printed and distributed as rapidly as possible when the Defense l'roketi -021 Act of 195o that was signed during which Mr. Carpenter suggested the Pederal the Reserve Banks be notified by telegram that drafts regillation would be sent to them tomorrow and that they should 178 9/2150 —3be . r --garded as confidential until the Board advised them of the final terras adopted in the regulation and authorized its distribution. Thereupon, upon motion by Mr. Evans, the following wire to all Federal Reserve Banks was approved DnAnimously: t "Board has agreed upon a draft of a new Regulation WI ,c) be adopted upon signing of the bill by President. It "L8 nOt -town at this time when that will be. However, we Understand that it will probably be by first part of week. itfo "We will advise you as soon as we have more definite rmation. t_ "We plan to air mail photo offset negatives to you 2 eMorriyw in order for you to print and distribute the gUlation to interested persons in your district. one The negatives wIll include alternative cover pages, 4.811°wing effective date September 11, the other -Nember 18. or "we will also wire you as soon as possible the text re 1)1"ees release which will be issued regarding the 1Etti0n. We will advise you later which effective to will aPply and when regulation is to be released public. Please maintain confidential until that time. vhich"The t Beard appreciates the information and advice he Reserve Banks furnished and which has been n10 t 8 helPful in the preparation of the regulation." 4 Mr. Leo d raised the question whether he should now inform 4elitz) Assistant Coiissioner of the Federal Housing Administrat14°1414 charge of Title I, of the proposed sed terms that would be applied bY41. 33°ard to home improvement loans under the consumer credit reN.ation so that that A Lgency could be consideri considering a reduction in ItheniaturitY pe rmitted for such loans to be insured under the Federal °118itg Act. Mr. Leonard was authorized to follow this procedure. Messrs. Lewis, Pawley, Shay, and Heath withdrew from the bleettla€ at this point. -4Chairman McCabe stated that he had been giving consideration to Bo 4rd members' assignments and that he expected to submit his l'ec°112/1endation8 for the consideration of the Board at a meeting 1414a6LY• In the meantime, because of the pressure for decisions in c°44ecti -011 with the real estate regulation, he suggested that Mr. No/to be asked to take the assignment for initial consideration of tatter 8 with respect to the real estate credit regulation, with the IlMerst ae he eliding that he would consult with such members of the staff Iiished and submit to the Board next week a suggestion for the Ilr°cedUrp , o be followed and the kind of organization to be set up ror ham, ing the regulation of credit in this field. This suggestion was approved unanimously. /441'' Riefler stated that he and Mr. Vest had been working with rePres nt e—atives of other interested agencies on the language of the rtteeti -- order to carry out the arrangement which he outlined at the 4 °f the Board on August 30, 1950, under which authority to 'vith the concurrence of the Housing Administrator, regulations tele.ti4g real estate construction credit in the conventional market %1°111 b e delegated to the Board of Governors and authority to reduce or 8118 Petd activities under the Government housing programs would be 4lege.te— a to the Vo Housing Administrator with the understanding that he 111.1t aite Such actions as were necessary, to apply to the extent 118() 9/1/50 practicable the same restrictions to the Government programs as were lied by the Board's regulation to the conventional residential raort gage Market. Mr. Riefler said an agreement on form had not yet been reached, that it was desirable that the language be agreed to this afternoon, and that he would suggest that he and Mr. Vest be allirized to agree to language which would in substance carry out the arrangeraent outlined at the meeting of the Board on August 30, 1950. This suggestion was approved unanimously. Mr. Riefler referred to the meetings he had been attending at the White Rouse in connection with the regulation of real estate cl"it arld stated that a preliminary draft of statement of policy, e°111d serve as a working guide for agencies having to do with ation, had been prepared at the suggestion of the White 11°11se Staff and that they were anxious to have some indication this a.rt rnoon as to whether the Board felt the statement was satisfactory 4B a general guide at this stage. One purpose of the memorandum, he vas to find out the attitude of the agencies that might be concrtlecl vith the regulation and to determine before issuance of the eeelltive order the major areas of disagreement as to how the law should be slich Etlataillistered. tilririg the ensuing discussion, Mr. Riefler read the draft of ta.terilent vhich had been prepared. 9/1/50 -6Mr. Vest said that, should the Board be given the responsibility Preparing , and issuing a real estate credit regulation, any indica- till3Y the Board that it agreed with such a memorandum might make it lirricult for the Board to depart from the program in the future withoirt obtailvng the agreement of the other agencies concerned, including tlie4eelltive office of the President, the Housing and Home Finance Agenc3r, the the Veterans Administration, the Farmers' Home Administration, Department of Commerce. Mr. Riefler stated that it was not a question of final approval °re' Pr°gram, that he had been asked whether he could advise the White 4°11se rePresentatives sometime this afternoon as to whether the Board °411 lock f avorably upon the proposed memorandum as a general guide, that he felt the statement was generally satisfactory, and that he feet it would be necessary or desirable for the Board to raise 114etic)ils about the general content of the statement at this time since It 1'18 '8 Phrased in broad terms as an indication of policies that the "e1'8.1 agencies would expect to follow but which were subject to el1411 later on. : rh. itli eiefler also said that at the present time it 4Pearea that making inHouse would wish to have the Board take the a ci. ill policythe connection with drafting and issuing real estate reglaations, subject to concurrence by the Housing and Home 111411ce Agshey. Chat 11 McCabe withdrew from the meeting at this point. 9/1/50 -7In a further discussion, Mr. Vest suggested that the Board nittht indicate that it had received the memorandum, that it appeared to rqresent the views of the staff, but that the Board had not had an cIPPollituni+ ---Y to consider the kind of regulation it would issue if given resibilitY for issuing one and would therefore have to reserve to itself the right to determine its policy after study of the matter. Mr. Riefler responded that the memorandum was intended as 4 geney., guide and that there was no suggestion that it was a firm t 4 ) and that he felt the Board might authorize him to say that Oh. i.rst reading the memorandum seemed reasonably satisfactory, and that 8 o fel ' as the Board could see at the present time it could serve 8atisra -ctc)rilY as a general guide for the agencies drafting a regula"04 for he control of real estate credit. This suggestion was discussed and approved unanimously. Secretar 's Note: The statement read by Mr. Riefler was in substance the "Statement of Policy for Control of Real Estate Credit", received by the Board from Mr. Steelman, Assistant to the President, with his letter of September 7, 1970, which has been Placed in the Board's files. this Point all of the members of the staff with the exception CarPenter and Sherman withdrew, and the action stated with each of the matters hereinafter referred to was taken by 9/1/50 -8Minutes of actions taken by the Board of Governors of the Neral Reserve System on August 31, 1950, were approved unanimously. M emorandum dated August 31, 1950, from Mr. Bethea, Director °lithe D ivision of Administrative Services, recommending that, to fill aliticiPated vacancy, Mrs. Gertrude E. Booth, a stenographer in the orrice c)f Mr. Draper, be transferred to the Division of Administrative Servi ces as a stenographer, with no change in her present basic salary or 3o35 Per annum, effective September 1, 1950. Approved unanimously. or the Meraorandum dated August 31, 1950, from Mr. Bethea, Director Division of Administrative Services, recommending that the zletignation of Miss Katherine Robinson, a page in that Division, be ac cePted to be effective, in accordance with her request, at the C0of business September 1, 1950. Approved unanimously. Mealorandum dated September 1, 1950, from Mr. Norton, reccAzzeiadiag that Mrs. Anne I. Cotten, Secretary to Mr. Nelson in tlietivisi°4 of Personnel Administration, be transferred to the Dositiort of Se cretary to Mr. Norton, with no change in her present salarY Of $5,300 per annum, effective September Approved unanimously. 3, 1970. 9/1/5o -9Memorandum dated August 30, 1950, from Mr. Vardaman, Ilee°43111encling an increase in the basic salary of Fletcher E. Brown, 411168864er 441111111, in Mr. Vardaman's office, from $2,690 to $2,770 per effective September 3, 1950' Approved unanimously. M emorandum dated August 25, 1950, from Mr. Vest, General e°11118e1, rec ommending an increase in the basic salary of Howard ItackleY, Assistant Counsel in the Legal Division, from $9,200 to Perannum, effective September 3, 1950. Approved unanimously. Memorandum dated August 30, 1950, from Mr. Szymczak, rec°Tinnelicling an increase in the basic salary of Fredrick L. Frost, 11"8"ger 414111Z, mr. Szymczak's office, from $2,610 to $2,690 per effective September 3, 1950' Approved Imenimously. Memorandum dated August 30, 1950, from Mr. Thurston, an increase in the basic salary of Bishop B. Hart, a ille88ellger in Mr. Thurston's office, from $2,770 to $2,850 per annum, effective September 3, 1950' Approved unanimously. ortale :erll°randum dated August 31, 1950, from Mr. Carpenter, Secretary th (Lard, rec ommending increases in the basic annual salaries of e 1,011014 emPloyees in the Office of the Secretary, effective vtekber 3, 1950: 11R5 -10Name Mildred E. Pilger Colzelia A. Bates laele4 E. Cook Title Supervisor Records Clerk Records Clerk Salary Increase From To $3,700 3,195 3,355 3,130 3,275 Approved unanimously. Memorandum dated August 31, 1950, from Mr. a-lrpenter, Secretary or the Board, recommending increases in the basic annual salaries of the folloving employees in the Office of the Secretary, effective SePteniber 3, 195c: Name Loretta D. aces . Beale t,'rearl G.Aeiebir 'Yta'Caret J.VFarrington , Moister 48.111:lette E. Devlin 1:ce A. Burton 'iorie Kidd MEtbe1 E. Wike Title Records Clerk Records Clerk File Clerk Records Clerk File Clerk File Clerk File Clerk File Clerk Salary Increase From To $3,755 $3,275 3,275 3,195 2,970 3,050 2,955 3,035 2,890 2,970 2,690 2,770 2,610 2,690 2,530 2,610 Approved unanimously. Lettels Reeerve B ellk of Mr. Shepard, Federal Reserve Agent of the Federal Minneapolis, reading as follows: Pertoil n accordance with the request contained in Mr. 0.0\re S letter of august 29, 1950, the Board of 1)4y1,2°1 4.' s aPProves, effective September 1, 1950, the Feder °f salaries ' to the following members of the Neze al Reserve Agent's staff at the rates indicated: Title Annual Salary w Helena Branch • ?Well Federal Reserve Agent's Stevts, surman Representative Federal Reserve Agent's Representative Approved unanimously. 9/1/50 -11Memorandum dated September 1, 1950, from Mr. Carpenter, SeeretarY of the Board, recommending that the Board authorize the 173ant of the costs of the refreshments and music for the informal recePtion to be held in the cafeteria from ettrnoon, 4 to 5 p.m. on Tuesday September 5/ for Messrs. Norton and Powell, and that the 4131.°Pr1ate item in the budget of the Division of Administrative SerVice s be increased to cover the costs. Approved unanimously.
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