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1530 Minutes of actions taken by the Board of Governors of the l'ecleral Reserve System on Monday, September 20, 1948. Aet , kale Special Library at 2:30 p.m. PRESENT: The Board McCabe, Chairman Eccles Szymczak Draper Evans Mr. Clayton Mr. Mr. Mr. Mr. Carpenter, Secretary Sherman) Assistant Secretary Riefler, Assistant to the Chairman Vest, General Counsel Millard, Director of the Division of Examinations Mr. Young, Associate Director of the Division of Research and Statistics Mr. Leonard, Associate Director of the Division of Bank Operations Mr. Mr. Mr. Mr. Mr. Before this meeting the Federal Advisory Council submitted 41°1"anduri covering topics discussed at a separate meeting of the Colttlei 1 on September 19, 1948, which were to be reviewed with the / 1 41 , , c e't a joint meeting to be held at 10:30 tomorrow morning. While the tow --ea were being considered Mr. Thomas, Director of the Division 4t earch and Statistics, entered the meeting. Following a discus— tort) c hairman McCabe suggested that Messrs. Riefler, Thomas, and be th t asked to prepare a draft of statement on the first five top— theCouncil's memorandum and that the draft be considered by °e1x1 at a meeting at 9:30 tomorrow morning prior to presentation kl.te • Joint meeting with the Council later in the morning. Chairman McCabe's suggestion was approved unanimously. 9/20/48 -2With respect to the remaining two topics in the memorandum received from the Council it was agreed that Chairman McCabe would state the views of the Board substantially along the lines recorded in the minutes of the joint meeting. Messrs. Riefler, Thomas, and Young left and Mr. Townsend, s„ 'elate General Counsel, joined the meeting at this point. 14-r• Clayton referred to a memorandum which he prepared under '44te of September 1, 1948 and which was circulated among the members the Board, reporting a discussion with Mr. Pace, Assistant Director the Bureau of the Budget, of the position that the Board had taken ttloPPositio n to certain provisions of Home Loan Bank legislation be- the recent session of Congress and the possibility of including l egisltltion the T a provision with respect to the factors to which l'eas4rY should give consideration so that, in deciding the quesof furnishing funds to the Home Loan Bank System for the purpose ' -111-d1ng additional liquidity in times of emergency, unhealthy eic41 during times when there was no emergency would not be enMr. Clayton said that Mr. Pace subsequently talked with I°Ich, General Counsel of the Treasury, concerning Mr. Pace's '131*.°13othat the Treasury consult with the Board of Governors before AtIlt44 ezY purchase of obligations of the Home Loan Bank System or g funds to the Federal Savings and Loan Insurance Corporation, htit - Kr Lrnch was not favorable to the suggestion and felt it was a 1532 V20/48 1/4c 41 departure from established procedure and would not be prac'41c41,1 4.43 and that Mr. Lynch suggested that members of the staff of the T' reesury Department consult with members of the staff of the 14.rd 4.uo find out whether an agreement could be reached as to legis- 14j, r -n which might be proposed for the purpose of accomplishing the 15Jecti„s. It was Mr. Lynch's thought, Mr. Clayton said, that it would difp. ' 1CUlt to write out in a statute the factors that the Treasury 1/qad be required to consider, and that instead the law should be to require that the Home Loan Bank System achieve a greater 4er ee of liquidity and furnish some kind of financial cushion if t4Q"ernment is to underwrite the obligations of that System in any Mr. Clayton added that it had been agreed with Mr. Lynch that "entatives of the Treasury would consider that suggestion with : 140 ' , , Economist, and Mr. Solomon, Assistant General Counsel, of t' (1 IllIceltrdis staff, with the thought that if a conclusion could be 4ehe d the matter would be discussed again with Mr. Pace. Mr. Clayton then referred to the action at the meeting on Septekber 10, 1948, authorizing the Legal Division to defer preparation e, Morandum with respect to the 1942 agreement between the Board, 41Ptroller of the Currency, and the Federal Deposit Insurance 7:Tr.tit -.on relating to the acquisition of additional banking offices 4samerica Corporation, Bank of America N. T. & S. A., or any 1533 9/20/48 -4- °tiler unit of the Transamerica group, until a conference could be With representatives from these agencies and the Department of lS ice to review developments in the Transamerica case and to re- their cooperation and the results reported to the Board. Mr. Ytc)/1 stated that the conference was held in the Special Library (Irthe Board's building on Wednesday, September 15, and, in addition nself and Messrs. Townsend, Chase, Horbett, Hurley, J. C. Smith, It' N. Thompson of the Board's staff, was attended by Messrs. (Mr. Delano, Comptroller of the Currency could not be present) 111111 44tulderson of the Comptroller's Office, Mt. Irwin D. Wright, Chief t 14)11a1 Bank Examiner for the Twelfth Federal Reserve District, Mr. k, Director, and Mr. Oppegard, Counsel, of the Federal Deposit 111.411ce Corporation, and Mr. Guy Hill from the Anti-trust Division the DePartment of Justice. Mr. Clayton stated that, after Mr. Townsend reviewed develop Si1 the Transamerica investigation and outlined the Board's there was a discussion of the request of the Board that reprelite*tives of the Comptroller's Office and Federal Deposit Insurance ooperate in the presentation of the case by testifying t to certain nonconfidential matters of fact having to do with the tol4t4 and extent of Transamerica Corporation and controlled banks ith the kind of business done by them. Mr. Upham said at the 144eti lig that he would inform Comptroller Delano of the request and 1534 V20/48 —5— 'Clayton stated that this morning he received a telephone call trom tz• Delano who seemed to be undecided whether representatives . _ 'of office could testify on the particular matters as requested 11„.. ' Townsend, i.e., whether they had such knowledge of the facts : 8 enable them to testify. Mr. Clayton added that Mr. Delano sed the question as to the use of reports of examination of 1)1-riits in the Transamerica group in connection with the hearing. Mr. Townsend stated that that question had been raised by t4r, ' 4)rolAroller of the Currency before and that he had explained th4t - was not the intention to put into the record of the hearing ola the T 'rensamerica case any material taken from reports of exam!but rather facts known to the representatives of the Compt 11 el*Is office, including Chief National Bank Examiner Wright 410, ' der'slonally knew of situ,,tions of a non-confidential character. lir, 1, °IglIsend also said that if the question of using examination NDort s Should come up, he did not think the case of Bank of America 1?, et al., to which the Comptroller of the Currency had retttredglas, I would be controlling for the reason that, since the Board of e'olterti °I's does not have the right to subpoena in connection with the tozttil e°111ing hearing, it would be presumed that having been given Ntk "ibility for enforcement of the Clayton Act the Board could use qt p °1'er to examine banks for the purpose of developing the necessary trItoN tion. Mr. Townsend did not anticipate, however, that the i 53a 9/Z/ 3 48 —6— (illesti°11 of the use of examination reports would arise. Mr. Clayton stated that while Comptroller Delano's response 181-11cklinite he hoped to discuss the matter with him further at the e°41erence of the National Association of Supervisors of State Banks 111411isville, Kentucky, later this week. Mr. Townsend added that ' It4 141-ght was entirely agreeable to testifying but that the impresqo hm been given that the matter was one which would require a deci • -4-on at the top level authority in the Treasury Department. Mr. Townsend also said that Mr. Oppegard stated on the day 110 . 0 the conference that he had discussed the matter with Mr. " Lild other officials of the Federal Deposit Insurance Corporation t 14t the full cooperation of that Corporation would be forthcoming. With reference to the memorandum concerning the 1942 agreerelating to the acquisition of additional banking offices by kispir. • -ulera.ca Corporation, preparation of which was deferred at the 14'etIn g on September °r1 10, Mr. Clayton stated that the most important at this time was whether the Board could get the active %per 'ion of the Comptroller's Office in the Transamerica hearing, ge Board's letters to the Comptroller on August 24 and the ticit)11 . to' ri her'3 replies of August 27 and August 30 set out the po°f the two offices with respect to their current interpretathe agreement, that he felt nothing further would be gained 1 -11-ng the correspondence, and that Mr. Townsend felt 9/20/48 4ticl1tional letters might well affect adversely the cooperation of the Comptroller's office. He suggested therefore, that no reply be a t to Comptroller Delano's letters of August 27 and August 30 and that, 4. - 4he staff be informed that it would not be necessary to prememorandum requested at the meeting on August 31, 1948. Mr. Eccles stated that, while he had not seen Mr. Delano's letters of August 27 and August 30, he felt the Board had presented Ite Points with respect to the agreement in its letters of August (4) that the most important thing now was to obtain cooperation of the Comptroller s Office as far as that was possible in the Translea case, and that, since it was the judgment of Messrs. Clayton 41t1 Tovrisend that a further response to Mr. Delano's letters might • '11'1111.1ger relations with the Comptroller's Office, he felt that no should be sent. Mr. Clayton's suggestion was approved unanimously. At this point Messrs. Vest, Millard, Leonard, and Townsend 11 liarel'r and the action stated with respect to each of the matters 14after set forth was taken by the Board: . Minutes of actions taken by the Board of Governors of the rq Reserve System on September 17, 1948, were approved unani- 9/2o/48 -8 Letter to Mr. Fulton, Vice President of the Federal Reserve of Cleveland, reading as follows: "In accordance with the request contained in your letter of September 14, 1948, the Board approves the appointment of Robert Lee Day, at present an assistant examiner, as an examiner for the Federal Reserve Bank of Cleveland. Please advise us of the date upon which the appointment becomes effective." Approved unanimously. Letter to Mr*. Fulton, Vice President of the Federal Reserve tatit °f Cleveland, reading as follows: 'Reference is made to your letter of September 13, 1948, recommending that consideration be given to cancellation of the condition of membership numbered 17 at the time of acceptance by The Brecksville Bank, Brecksville, Ohio, and renumbered 5 under the Board's Program of revision of conditions of membership, effective September 1, 1948. "The condition in question requires that the bank shall stamp on each stock certificate issued a legend , citing the pledge of dividends to trustees for waiving "LePositors under an agreement dated March 21, 1934. ulle the claims of waiving depositors have not been -Liquidated in full, it is understood that the plan of reorganization under which the agreement was executed 1) srovided that any dividends would be paid to the trustees for a period of only five years and that the trusees have had no claim on the bank's earnings or divi'aends since 1939. "In the circumstances, and in view of your recomIlleladation, the Board of Governors cancels condition &flbered 17 as set forth in its letter to the Board of 1)1rectors of The Brecksville Bank Company, dated AuglIst 28, 1934, and renumbered 5 on September 1, 1948." Approved unanimously. „_ tde.:38 9/20/48 -9Letter to the Auto Finance Company, 530 University Building, 13°47er 2, Colorado, reading as follows: "This will acknowledge your recent letter requesting that the Kelley Blue Book be designated for the purposes of Regulation W. "The Kelley Blue Book has now been designated for the purposes of the regulation in Region C but riot for Region B, and so it cannot be used for this Purpose in the Denver area. "The Board considered extending the Kelley Blue Book designation to Region B, but felt that this was inadvisable in view of the considerably lower prices quoted in the guide books for this region compared Iiith Region C." Approved unanimously. Letter to the Honorable Styles Bridges, Chairman, Committee 4 ATI, 1 -4-vropriations, United States Senate, Washington 25, D. C., readfollows: "This refers to your letter of September 7, 1948, :1,equesting that the Senate Appropriations Committee be °Irnished with copies of all publications of the Board ef Governors issued during the fiscal year 1948. "Since the Board of Governors does not receive i el3Propriations made by the Congress and since the 41148 , , derived from assessments against Federal Re-erve Banks, with which its administrative expenses Paid, are expressly declared by Congress not to 'Government funds or appropriated moneys' (sec. 10, ?deral Reserve Act), it is understood from informal nscussions with members of your staff that your Comtee may not desire the information requested. Hower, if such information is desired, we will be glad ' 0 furnish it promptly." Approved unanimGiiiir 4(4 Secretary.
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