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Minutes for
To:
Members of the Board
From:
Office of the Secretary
September 19, 1962
Attached is a copy of the minutes of the
Board of Governors of the Federal Reserve System on
the above date.
It is not proposed to include a statement
With respect to any of the entries in this set of
minutes in the record of policy actions required to
be maintained pursuant to section 10 of the Federal
Reserve Act.
Should you have any question with regard to
the minutes, it will be appreciated if you will advise
the Secretary's Office. Otherwise, please initial
below. If you were present at the meeting, your
initials will indicate approval of the minutes. If
You were not present, your initials will indicate
only that you have seen the minutes.
Chm. Martin
Gov. Mills
Gov. Robertson
Gov. Balderston (YV
Gov. Shepardson
Gov. King
Gov. Mitchell
ic41
,
Minutes of the Board of Governors of the Federal Reserve
SYsteln on Wednesday, September 19, 1962.
The Board met in the
Board Room at 10:00 a.m.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Martin, Chairman
Balderston, Vice Chairman
Mills
Shepardson
King
Mitchell
Mr. Sherman, Secretary
Mr. Kenyon, Assistant Secretary
Mr. Young, Adviser to the Board and
Director, Division of International
Finance
Mr. Fauver, Assistant to the Board
Mr. Hackley, General Counsel
Mr. Hexter, Assistant General Counsel
Mr. Dembitz, Associate Adviser, Division
of Research and Statistics
Mr. Sammons, Adviser, Division of International Finance
Mr. Conkling, Assistant Director, Division of Bank Operations
Mr. Daniels, Assistant Director, Division of Bank Operations
Mr. Kiley, Assistant Director, Division
of Bank Operations
Mr. Masters, Associate Director, Division of Examinations
Mr. Goodman, Assistant Director, Division of Examinations
Mr. Spencer, General Assistant,
Office of the Secretary
Mr. Young, Senior Attorney, Legal Division
Mr. Partee, Chief, Capital Markets Section,
Division of Research and Statistics
Mr. Irvine, Chief, Asia, Africa, and Latin
America Section, Division of International Finance
Mr. McClintock, Supervisory Review Examiner,
Division of Examinations
ne, Review Examiner, Division
Poundsto
Mr.
ions
Examinat
of
-2-
9/19/62
Discount rates.
The establishment without change by the
Pederal Reserve Bank of Boston on September 17, 1962, of the rates
°r1 discaunts and advances in its existing schedule was approved
Inlanimously, with the understanding that appropriate advice would
be sent to that Bank.
Circulated or distributed items.
The following items, which
had been circulated or distributed to the members of the Board and
e
ecTies of which are attached to these minutes under the respectiv
ttft numbers indicated, were approved unanimously:
Item No.
Letter to The Chase Manhattan Bank, New York,
!eV York, granting permission for Chase
klyanhattan Overseas Banking Corporation, New
111*L, New York, to increase its investment in
a e Chase Manhattan Bank (South Africa) Ltd.,
hannesburg, Republic of South Africa, and
:
ing without objection the proposal of The
8 ace Manhattan Bank to invest an additional
4n1 in the capital of Chase Manhattan Overseas
11944ti-ng Corporation.
1
1detter to Chase Manhattan Overseas Banking
al217P0rati0n, New York, New York, approving
.4 aMendment to its Articles of Association.
'
2
tter to The Reading Trust Company, Reading,
ae.:!48Y1vania, approving the establishment of
ul'anch at 2002 Penn Avenue, West Lawn.
3
Letler
to Fidelity-Philadelphia Trust Company,
es adelphia, Pennsylvania, approving the
Avtablishment of a branch at 2401 Pennsylvania
enue and an investment in bank premises.
14.
t tter to Security Bank and Trust Company,
o
:
ment
otat°n4a, Minnesota, approving the establish
rila a branch across the street from the bank's
in office and an investment in bank premises.
5
9/19/62
-3Item No.
Letter to Farmers And Merchants Bank of Long
each/ Long Beach, California, approving an
!
'xtension of time to establish a branch on
Artesia Street between Obispo and Indiana
Avenues.
6
.,Letter to First National Bank of Waukesha,
alaesha, Wisconsin, approving its
41Pp1emental application for fiduciary powers.
lietter to Peoples Trust City Bank, Reading,
ennsylvania approving an investment in bank
Premises. )
8
14Letter to The Citizens Bank of Windsor, Windsor,
hissouri, waiving the requirement of six months'
.4()tice of withdrawal from membership in the
?ed.eral Reserve System.
9
rLetter to the Bureau of the Budget regarding
17,1rised form F. R. 508, to be used in the
262 Survey of Common Trust Funds. (With the
4ziderstanding that a similar letter on this
also would be sent to the Presidents
l
o
s,Nect
4 all Federal Reserve Banks.)
10
Letter to Congressman Mack, Chairman of the
11
r°118e Subcommittee on Commerce and Finance,
0rd1ng regulation of stock market credit
e2
the desirability of listing national bank
c/eks on securities exchanges.
4Letter to the Bureau of the Budget expressing
objection to approval of enrolled bill
R. 12899, "To amend section 5155 of the
lijised Statutes relating to bank branches
t 'eh may be retained upon conversion or
°Ilsolidation or merger."
12
tetter to the Bureau of the Budget recommending
41Tr),.
°Val of enrolled bill H. R. 12577, "To place
ila"qlority over the trust powers of national banks
the Comptroller of the Currency."
13
9/19/62
Letter to the Bureau of the Budget expressing
40 objection to approval of enrolled bill
R. 7796, "To amend certain lending limita"4-ons on real estate and construction loans applicable to national banks."
14
With respect to Item No. 11, discussion preceding the Board's
action resulted in agreement on editorial changes in the draft of
letter to Congressman Mack, including a revision in the sequence of
certain paragraphs in order to strengthen the introductory portion
or the letter.
Membership in Center for Latin American Monetary Studies.
There had been distributed a memorandum dated September 11, 1962,
troM the Division of International Finance discussing the question
or Federal Reserve membership in the Center for Latin American
Monetary Studies.
The memmunchmipointed out that in a letter to Chairman
liartin dated July 18, 1962, Mr. Javier Marquez, Director of the
Center, proposed that the Federal Reserve System assume a share
c3r financial responsibility for the increased activities that
iat for
'4)10-id, result from the Center becoming a permanent Secretar
the meetings of Central Bank Technicians of the American Continent.
1ee the System had participated in the meetings since their
14cePtion, Mr. Marquez suggested that the System might want to make
4 financial contribution for this specific purpose.
The letter
9/19/62
-5-
indicated that Mr. Marquez had in mind a financial contribution on
the part of the System that would be equal to the quota which the
SYstem would pay if it were a member of the Center.
The memorandum stated that since the financial implications
Of the new proposal would be the same as if the System became a
Member of the Center, it seemed appropriate to reconsider the Board's
evious decision not to become a member (see minutes of October 14,
'
Pl
1952) and February 211 1957).
or
In this connection, the development
the activities of the Center over the years and the general
chealge in the climate of relationships between the United States
44i Latin America, signified principally by the Alliance for
I'l'ogress program, seemed to justify such a reconsideration.
The memorandum went on to outline the history of the Center
describe its major activities, after which some considerations
l'/ere discussed that could be advanced in favor of membership.
The question of membership having been placed on the agenda,
there was a rather extended discussion of this matter during which
11411-ous facets of the subject were explored, attention being
t°eused on the advantages and disadvantages that could be seen
11111 ("associate") membership.
111 '
It was pointed out that in the
1)4St there had been some feeling that the System might be embarrassed
1)Y' Possible publications of the Center and also that the assessments
Illeident to membership might continually increase.
However, the
-6-
9/19/62
Center appeared to have operated soundly over the years, ameliorating
to some extent the doubts that had been expressed when the question
or membership was originally discussed.
Consideration then turned to the role that the System
might be expected to assume in the Center if it were to become
Meraber,
and this discussion resulted in a consensus that although
rull membership might have certain advantages, the possibility of
becoming
a "collaborating" member should be explored.
It was
telt that there would appear to be some features making a colh
lg
-orating membership more appropriate for the System than full
ale
mbership•
Following additional discussion, it was understood that Mr.
1.°11-4g would explore with Mx. Marquez the feasibility of collaborating
41erabership and that the results of such exploration would be reported
t° the Board.
Travel authorization for Mr. Katz.
Governor Shepardson
l'eterred to a memorandum dated September 14, 1962, from Mr. Young
4/101 recommended that Mr. Katz, Associate Adviser, Division of
XllteTnational Finance, be authorized to travel to Switzerland for
41313roxi1flate1y ten days beginning about October
4, 1962,
to attend
for International
Meeting of central bank officers at the Bank
Settaements for discussion of the Eurodollar market, and to visit
to
European central banks.
9/19/62
-7Without objection, Mr. Katz was authorized to make the trip.
The meeting then adjourned.
Secretary's Notes: On September 18,
1962, Governor Shepardson approved
on behalf of the Board the following
items:
Telegram to the Federal Reserve Bank of Dallas (attached
Eal._12) approving the appointment of James T. Allen as
vkssistant examiner.
It
thA
Memoranda from appropriate individuals concerned recommending
following actions relating to the Board's staff:
ointments
Jane H. Farrell as Records Clerk in the Office of the Secretary,
141th basic annual salary at the rate of $4,145, effective the date of
entrance upon duty.
Susan Clark as Statistical Clerk in the Division of Bank
.zy• erations, with basic annual salary at the rate of $4,250, effective
• date of entrance upon duty.
Susan S. Burr as Consultant in the Division of Research and
cu
oLatistics, on a temporary contractual basis, with compensation
!t_ the rate of $50 per day for each day worked for the Board,
l'rective to December 31, 1962, and with the understanding that
"
necessary transportation and per diem for time spent in travel
cLtlas would be paid in accordance with the Board's travel regulations.
'
Leav
- -....,,e_Ltrithout pay
Secretary, Division of Research and Statistics,
,
4.01, Nancy Keen,
the period from September 2 through September 12, 1962.
of sick leave
M. peters, Statistical Assistant, Division of Research and
f hours) through October
•
- period
from September 4 6
na:tisties, for the
1962.
p,
Ann
9/19/62
-8-
tance of resignations
Milton Moss, Economist, Division of Research and Statistics,
erfective at the close of business September 29, 1962.
Joanne V. Cass, Secretary, Division of International Finance,
effective at the close of business September 26, 1962.
Richard N. Thompson, Review Examiner, Division of Examinations,
effective at the close of business September 21, 1962.
Governor Shepardson today approved on behalf
of the Board the following items:
Telegram to the Federal Reserve Bank of Boston (attached
4 tem No. 16) approving the designation of C. Richard Peterson as
'
213ecia1 assistant examiner.
Telegram to the Federal Reserve Bank of Minneapolis (attached
Item No. 17) approving the appointment of Wendell M. Newgaard as
'assistant examiner.
Secretary
•triS
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
•
Item No. 1
9/19/62
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
September 19, 1962
The Chase Manhattan Bank,
°Ile Chase Manhattan Plaza,
Ilew York 15, New York.
Gentlemen:
In accordance with the request and on the basis of the
iisnformation furnished in your letter of August 1, 1962, as amended
:
Your letter of August 6, 1962, transmitted through the Federal
eserve Bank of New York, the Board of Governors grants permission
Chase Manhattan Overseas Banking Corporation ("CMOBC"), New
a°rk, to increase its investment in The Chase Manhattan Bank (South
rica) Ltd., Johannesburg, Republic of South Africa ("South African
") to an amount not to exceed us$3,545,000; provided that CMOBC
?"4
all not carry on its books the shares of the South African Bank at
inet amount in excess of the book capital accounts of the South
rican Bank, after giving effect to the elimination of all known
t
The Board has noted without objection that, pursuant to a
f,olution of the Board of Directors of The Chase Manhattan Bank, the
Proposes to invest an additional sum not exceeding $1,000,000 in
"e capital of CMOBC.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 2
9/19/62
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONOCNCE
TO THE BOARD
September 19, 1962
Chase Manhattan Overseas Banking Corporation,
1 Chase Manhattan Plaza,
New York 15, New York.
Gentlemen:
The Board of Governors approves the amendment
to Article SEVENTH of the Articles of Association of
Chase Manhattan Overseas Banking Corporation to provide
that the capital stock of the Corporation shall be
$4,7502000 divided into 4,750 shares of the par value of
$1,000 each, as outlined in your letter of August 21 1962.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
•
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
Item, No. 3
9/19/62
ADDRESS OrriCIAL CORRESPONDENCE
TO THE BOARD
September 19, 1962
Board of Directors,
The Reading Trust Company,
Reading, Pennsylvania.
Gentlemen:
The Board of Governors of the Federal Reserve
System approves the establishment by The Reading Trust
Company-, Reading, Pennsylvania, of a branch at 2002 Penn
Avenue, West Lawn, Berks County, Pennsylvania, provided
the branch is established within one year from the date
of this letter.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
BOARD OF GOVERNORS
OF THE
Item No.
FEDERAL RESERVE SYSTEM
It.
9/19/62
WASHINGTON 25, D. C.
ADDRESS OFFICIAL. CORRESPONDENCE
TO THE BOARD
September 19, 1962
Board of Directors,
Fidelity-Philadelphia Trust Company,
Philadelphia, Pennsylvania.
Gentlemen:
The Board of Governors of the Federal Reserve
System approves the establishment of a branch by FidelityPhiladelphia Trust Company, Philadelphia, Pennsylvania,
in The Philadelphian (apartments), 2401 Pennsylvania
Avenue, Philadelphia, provided the branch is established
Within one year from the date of this letter.
The Board of Governors also approves, under the
Provisions of Section 24A of the Federal Reserve Act, an
additional investment of $28,500 in bank premises for
leasehold improvements incident to the establishment of
the branch approved in this letter.
Very truly yours,
(Signed) Elizabeth L. Carmichael
•
Elizabeth L. Carmichael,
Assistant Secretary.
BOARD OF GOVERNORS
o
Item No. 5
OF THE
s o••
Govi..
FEDERAL RESERVE SYSTEM
9/19/62
WASHINGTON 25, D. C.
ADDRESS
OFFICIAL
CORRESPONDENCE
TO THE BOARD
September 191 1962
Board of Directors,
Security Bank and Trust Company)
Owatonna, Minnesota.
Gentlemen:
The Board of Governors of the Federal Reserve
System approves the establishment of a branch by Security
Bank and Trust Company, Owatonna, Minnesota, directly
across the street from the bank's main office, provided
the branch is established within one year from the date
of this letter.
The Board of Governors also approves, under the
an
provisions of Section 24A of the Federal Reserve Act,
amount,
this
investment of $351,301.98 in bank premises. Of
pro$20l,301.98 was spent for property on which the bank
00.
$150,0
mately
poses to make improvements costing approxi
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
BOARD OF GOVERNORS
I I,
'
Item No.
OF THE
•
.
tk
FEDERAL RESERVE SYSTEM
.•
6
9/19/62
WASHINGTON 25, D. C.
LAJ
4.1 •
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
L itEstiL.•
s.....•
September 19, 1962
Board of Directors,
Farmers and Merchants Bank of Long Beach,
Long Beach, California.
Gentlemen:
The Board of Governors of the Federal Reserve
System extends to August 30, 1963, the time within which
Farmers and Merchants Bank of Long Beach may establish
a branch on the south side of Artesia Street between
Obispo and Indiana Avenues Long Beach, California.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
BOARD OF GOVERNORS
Item No.
OF THE
FEDERAL RESERVE SYSTEM ,
7
9/19/62
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
September 191 1962
Board of Directors,
,First National Bank of Waukesha,
sialikesha, Wisconsin.
Gentlemen:
The Board of Governors of the Federal Reserve System has
given consideration to your supplemental application for a fiduciary
Power and grants you authority to act, when not in contravention
(c,
311 State or local law, in any other fiduciary capacity in which
°tate banks, trust companies, or other corporations which COM4 into
e°mPetition with national banks are permitted to act under the laws
!r the State of Wisconsin. The exercise of such right shall be
nbJect to the provisions of Section 11(k) of the Federal Reserve
Act and Regulation F of the Board of Governors of the Federal Reserve
8Yetem.
In addition to the fiduciary power herein authorized, the
bank was granted authority, on August 6, 1923, to act as trustee,
o
e3tecutor, administrator, registrar of stocks and bonds, guardian
r estates, assignee, receiver, and committee of estates of lunatics.
A formal certificate indicating the fiduciary powers that
YoUr bank is now authorized to exercise will be forwarded in due
e(lurse.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
BOARD OF GOVERNORS
OF THE
Item No. 8
FEDERAL RESERVE SYSTEM
9/19/62
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
September 191 1962
Board of Directors,
Peoples Trust City Bank,
Reading, Pennsylvania.
Gentlemen:
The Board of Governors of the Federal Reserve
System approves, under the provisions of Section 24A
of the Federal Reserve Act, an additional investment
of $1,745,412 in bank premises by Peoples Trust City
Bank, Reading, Pennsylvania, for the purpose of constructing new main office and branch buildings through a wholly
owned real estate affiliate to be organized.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
Item No.
BOARD OF GOVERNORS
9
9/19/62
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
September 191 1962
Board of Directors,
The Citizens Bank of Windsor,
Windsor, Missouri.
Gentlemen:
ded
The Federal Reserve Bank of St. Louis has forwar
dated
letter
s'
Simmon
to the Board of Governors President
resolution
August 25, 1962, together with the accompanying
withdraw
to
ion
intent
dated June 5, 1962, signifying your
requesting
and
System
e
from membership in the Federal Reserv
awal.
withdr
such
of
waiver of the six months' notice
The Board of Governors waives the requirement of
ions of
six months' notice of withdrawal. Under the provis
your
institution
H,
tion
Regula
s
Board'
Section 208.10(c) of the
time
any
within
at
ship
member
its
of
ation
may accomplish termin
aw
to
ion
withdr
intent
of
notice
that
date
eight months from the
l
the Federa
from membership was given. Upon surrender to
e stock issued
Reserv
l
Federa
the
of
Louis
Reserve Bank of St.
and appropriate
led
cancel
be
will
stock
such
to your institution,
refund will be made thereon.
It is requested that the certificate of membership
be returned to the Federal Reserve Bank of St. Louis.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
4 ir
BOARD OF GOVERNORS
OF THE
/tern
FEDERAL RESERVE SYSTEM
No.
lo
9/19/62
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
tkt MS1.
ao***
September 19, 1962
11r. David E. Cohn,
Clearance Officer,
Office of Statistical Standards,
Bureau of the Budget,
Washington 25, D. C.
Dear Mr. Cohn:
•
This refers to the form F. R. 508, "Annual Survey of Common
Trust Funds," Budget Bureau No. 55-R191.3, approval of which expires
August 31, 1964. Enclosed are copies of your form 83 and of the
Present and proposed revised forms.
The proposed revisions are largely of a technical nature
and for purposes of clarity and simplifying the reporting and
tabulating. In the Investments section, separate categories have
been provided for "Foreign" bonds and "Real Estate Loans", and
the "Savings Accounts" category has been combined with "Other
,nvestments". The preferred stocks section has been simplified
Y deleting the "financial" and "trade" subclasses. The item
_Investments Not Classified Above" has also been deleted; by
4'00tnote, any such investments are to be included with "Other
l
Avestments".
In order to facilitate the tabulation of reporting
Institutions according to their size, the Supplementary Information
,
,
eeetion has been expanded to obtain gross earnings of the Trust
'
JePartment and total assets of the reporting bank.
The list of securities used as examples in the "Instructions
;
11a Explanations" section has been updated to reflect Common Trust
,Ilnd security holdings frequently misclassified; "Principal Cash" ,
-Lnstructions regarding securities sold and not delivered have been
hanged to conform with plans under which most common trust funds
operate.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
1.1e1o8ures
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 11
9/19/62
WAS
OFFICE OF THE CHAIRMAN
September 24, 1962
The Honorable Peter F. Eack, Jr.,
Chairman, Subcommittee on Commerce and Finance,
Committee on Interstate and Foreign Commerce,
House of Representatives,
Washington 25, D. C.
Dear Er. Chairman:
This is in reply to your letter of August 29, 1962,
concerning the article on stock market credit published in
the wall Street Journal last August 3. The subject of securities credit has many facets, and a fact central to discussions
such as that you have cited is a lack of statistical evidence
as to the magnitude of credit reaching the market from the
various sources mentioned. Data are collected on a regular
basis only for loans from brokers and from banks for the purpose of purchasing or carrying securities.
From the standpoint of dollar volume, it seems
probable that bank loans constitute by far the most important
source of credit extended on securities without needing to comply with margin regulations. This is not to say that such loans
are illegal, since Regulation U is limited to a narrow segment
of all collateralized loans. Loans for purchasing and carrying
unlisted stocks, as well as those for bonds, are excluded from
the scope of the Regulation, as are all unonpurposeu loans
s),
(loans for purposes other than purchasing or carrying securitie
regardless of collateral.
Following the stock market break in May, there was a
good deal of speculation in the press that margin calls on "nonpurpose', loans had played a significant role in the decline. It
is important to recognize that two issues are involved here. One
relates to the question of whether credit may have been extended
illegally in violation of Regulation U to borrowers filing false
"Purpose statements." Last June, Mr. Nate White, Editor of the
ns,
American Banker, solicited the Board's comment on such allegatio
time.
that
at
made
and I am enclosing a copy of the reply
{
The Honorable Peter F. Mack, Jr.
The other issue concerning Hnonpurpose" loans relates
to the role played by such credit in precipitating stock sales
during the market decline. An informal survey of 78 large banks
conducted by the Federal Reserve Banks indicated that the number
of callst issued on nonregulated security leans in late May
Probably was substantial but that, in most instances, borrowers
met these calls by providing additional margin. Statistical inadequacies make this survey unsuitable for publication or general
distribution; a copy is enclosed, however, for the use of your
subcommittee.
What these allegations and uncertainties point to is the
need for reliable data on the magnitude and nature of bank credit
extensions involving securities collateral. The Federal Reserve
System, in cooperation with the SEC, has for some months been
engaged in planning a bank loan survey to fill this gap. As a
result, data will be collected from a sample of banks on the basis
of loans outstanding on September 26 which will permit estimates
of the magnitude of bank credit secured by stocks and bonds-including loans for purposes other than purchasing and carrying
securities, an area in which statistics have not been collected
from banks and for which no benchmark data are available. It will
also supply detail (in such form as to permit cross-classification)
on the types of security serving as collateral for these loans, the
Purposes for which the loans have been made, and their terms and
duration. I shall send you a copy of the survey findings as soon
as they are available.
Regarding the role of unregulated nonbank lenders in
financing stock market purchases, credit from these sources-foreign or domestic--has been a matter of concern to the Board,
but data that would indicate the amount of such credit are difficult
to obtain.. The regulating of such lenders would present substantial
administrative difficulties, and the Board has not considered that
such regulation should be undertaken unless credit from these sources
.lopeared sufficiently important to make regulation clearly desirable
In the public interest. In 1959, however, the Board did amend Regulation U to deny unregulated lenders access to bank credit on terms
Other than full compliance with the current terms of margin requirements. The Securities and Exchange Commission and the Board have
been developing plans for collecting more detailed and frequent in formation on the principal known unregulated lenders.
The Honorable Peter F. Mack, Jr.
ty of listing bank
You also invite views on the desirabili
you imply in your letter,
stocks on national securities exchanges. As
interest that
this question involves considerations of the public
stocks. Howother
Might arise in the case of bank stocks but not of
want to
that
nges
excha
ever, assuming that there are banks and stock
of
ngs
listi
nt
prese
arrange for such listings--in addition to the
such
are
there
that
stocks on bank holding companies—'I do not feel
ice.
pract
of the
adverse aspects as to call for prohibition
e to the possibility
The adverse aspects, of course, relat
city might under
publi
that stock exchange trading and the related
public's attitude
the
on
some circumstances have unfavorable effects
deposits. This
of
s
rawal
t?ward the bank, possibly resulting in withd
bank's stock,
the
of
might result from an extreme decline in the price
could
which
stock
or even from large speculative activity in the
ices on
pract
nd
unsou
e or
Possibly be interpreted as suggesting unsaf
has,
ance
insur
it
depos
the part of the bank's management. Federal
such
under
s
rawal
withd
ve
h?wever, reduced the possibility of massi
circumstances.
listing on a stock
On the other hand, to the extent that
, this would tend
stock
bank
exchange improves the marketability of a
stock. By
ional
addit
to increase the ability of the bank to sell
ts could be
opmen
devel
r-icreasing the adequacy of bank capital, such
public interest
the
and
bank,
?eneficial to customers of the particular
al posicapit
the
of
ing
3-11 general might also benefit from strengthen
tion of the banking system.
matter is that over-theA final point to be made on this
are already widely discounter quotations for leading bank stocks
listing on stock
seminated in the financial press. For these banks,
ase the extent to which sharp
!xChanges might not significantly incre
, would become known to the
"clines in prices, if they were to occur
Public.
Sincerely yours,
(Signed) Wm. MeC. Martin, Jr.
Wm. 142C. Martin, Jr.
flelosures 2
BOARD OF GOVERNORS
Iten No. 32
9/19/62
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
OFFICE
OF THE CHAIRMAN
September 19, 1962
;4-111-11ip S. Hughes, Assistant Director
Zket, -Le gislative Reference,
kr,„-,
1:
1ti1Te Office of the President,
W aci7i1.1 of 'the
Budget,
gtort 25 D.
C,
Attention Mrs. Garziglia.
Hughes:
This is to advise, in response to your communication of
e
ertrer 18, 19620 that the Board has no objection to approval of
41/18 ()lied bill
bill, H.R. 128994 To amend section 5155 of the
111)04!cl Statutes
to bank branches which may be retained
'
°417ersion or consolidation or merger."
Sincerely yours,
(Signed) 11111. WC. Martial Jr.
McC. Martin, Jr.
Item NO. 13
BOARD OF GOVERNORS
9/19/62
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
OFFICE OF THE CHAIRMAN
September 19, 1962
Assistant Director
.,.111-P S. Hughes,
„11i
111?
‘7,
Legislative Reference,
tI
;CI
Zttife Office of the President,
lita
of the Budget,
-4'44g-ton 25, D. C.
Attention Mrs. Garziglia.
Ntar
Hughes:
This is to advise,in response to your communication of
4pt..,
4:07er 181 1962,that the Board recommends approval of the enrolled
1 44
)
12577,"To place authority over the trust powers of national
In the Comptroller of the Currency."
Sincerely yours,
(Signed) WM. Me. Martin, Jr.
WM. McC. Martin, Jr.
;(14
Item No. 14
9/19/62
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
wAsbsI NOTON
OFFICE OF THE CHAIRMAN
September 19, 1962
?hillip S. Hughes, Assistant Director
tor
Itte,,—
'
9giSlative Reference,
1341,'"iive Office of the President,
ilifiale,
,
11 of the Budget,
"4-11gton 25, D. C.
Attention Mrs. Garziglia.
tear
Hughes:
,iaeptenb,
This is to advise, in response to your communication of
18, 1962 that the Board has no objection to approval of
7796, "To amend certain lending limitations
re1aled
estate and construction loans applicable to national banks."
KLO
Sincerely yours,
(Signed) Wm. WC. Martin, Jr.
Win. McC. Martin, Jr
Item No. 15
9/19/62
TELEGRAM
LEASED WIRE SERVICE
HOARD
OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON
September i8, 1962
SULLIVAN - DALLAS
Reu 1et September 12, 1962, Board approves appointment of
James T. Allen as assistant examiner for Federal Reserve
Bank of Dallas, effective today.
(Signed) Elizabeth L. Carmichael
CARMICHAEL
Item NO. 16
TELEGRAM
9/19/62
LEASED WIRE SERVICE
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON
September 19, 1962
LAUAM
BOaDO
Reurtel 6eptember 18, 1962, Board approves designation of
C. Richard Peterson as special assistant examiner for
Federal Reserve Bank of Boston for purpose of participating
in examinations of the five banks named in your wire.
(Signed) Elizabeth L. Carmichael
C:tRI CHA
If;()".;1
A IA
TELEGR
SERVICE
LEASED WIRE
Item No. 17
9/19/62
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON
September 190 1962
DEMING - MINNEAPOLIS
Reurlet September 131 1962, Board approves appointment of Wendell M.
Newgaard as assistant examiner for Federal Reserve Bank of Minneapolis.
Please advise effective date of appointment.
(Signed) Elizabeth L. Carmichael
CARMICHAEL
@FedFRASER