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1118 A meeting of the Board of Governors of the Federal Reserve SYstem was held in -Washington on Saturday, September 6, 1941, at 11:30 PRESENT: Mr. Ransom, Vice Chairman MT. Szymczak Mr. Draper Mr. Morrill, Secretary Mr. Bethea, Assistant Secretary The action stated with respect to each of the matters hereinft" r eferred to was then taken by the Board: Telegram to Mr. Sanford, Secretary of the Federal Reserve Bank Of Iew chance York, stating that the Board approves the establishment without by the Federal Reserve Bank of New York on September 4, 1941, of the rates of discount and purchase in its existing schedule. Approved unanimously. Letter to the Chairman of all of the Federal Reserve Banks as follows: 1,, "During the latter part of 1938 and early part of t 9 the Board gave considerable thought to the difficulsals ?xperienced in passing upon changes in officers' a arles at all Federal Reserve Banks and Branches within a40Tparatively short period at the beginning of the year, deci n 1939 advised the Federal Reserve Banks that it had of-sd to review the salaries of officers in the months be,-.'Lreh, April, and May of each year, such salaries to come effective on the first of the following month. "It is believed that the revised procedure has been 11allY advantageous to the Reserve Banks and the Board of 6 slIrpcIvern°rs, particularly in relieving some of the prosrod the end of each year. There appears to be Uncertainty on the part of the Reserve Banks, how as to just what information is desired by the Board connection with officers' salaries under the revised 11.19 9/6/41 -2- ' . 'Procedure and when it should be submitted. Accordingly, it is requested that the following data be furnished the Board as early as practicable in March, April, or May of each Year: 1. A list of all officers as of March 1, April 1, or May 1 (depending on whether their salaries are reviewed by the Board in March, April, or May) showing in the case of each officer (a) name: (b) title; (c) principal departments supervised (Form A classification); (d) present annual salary; and (e) annual salary for the year beginning on the first of the following month as fixed by your board of directors subject to the approval of the Board of Governors. If the Bank's counsel is not an officer of the Bank, his annual retainer fee should be shown separately. 2. In the case of each officer for whom an increase in salary is recommended a statement of changes in his duties and responsibilities since his last increase in salary and of any ether factors that have a material bearing on the proposed increase. 3. A copy of the current organization chart of the Reserve Bank including Branches, if any. "Prom time to time the Reserve Banks have found it ?rable, because of resignations or otherwise, to make sil-tain changes in positions of officers during the year. ;_ nee the Board's approval of salary for a given officer co ntingent upon his occupying a specific position, it tojequested that whenever an officer is assigned to another of I ci?i°n (change in title) his salary be fixed by the board of rectos for the new position subject to the approval ciahe Board of Governors. The Board would also appredutie receiving current advice of any major changes in the titir of an officer which do not involve a change in either or salary. of theYOu may wish to review the provisions of the by-laws offi Dank that relate to the election or appointment of whetrrs and the fixing of their salaries and consider suit er any changes appear necessary or desirable as a rethe changed procedure. 16, lnlhis letter supplements the Board's letter of June 739) and supersedes and cancels all previous letters, Z ),!. */'ti 20 9/6/41 -3"instructions, etc. relating to the submission of officers' salaries to the Board, except that it should not be construed to change in any way the present practice of taking informally in advance with the appropriate member of Board any important adjustments contemplated in official salari,-s. Approved unanimously. Letter to the Presidents of all of the Federal Reserve Banks reart; "ng as follows: "This refers to the Board's telegram of today, copy ntached, requesting that you have computed, in the case each member bank, the percentage ratio of its demand 'o'relP3sits, both including and excluding interbank deposits, 1938re 30, 1941 to the corresponding figures on June 30, t "A supply of forms (tables 1 and 2) for use in making frequency distributions of the banks is enclosed. .As ' 4t: lIdloated in the Board's telegram, the frequency distribu131°ns should be mailed or telegraphed in time to reach the f?ard t s offices by Monday morning, September 15. If the vtgures are telegraphed the code words and letters profor the purpose should be used to designate the banks each group. For example, in table 1, the number of remjv'e city banks with demand deposits under 610,000,000 , i 3t be Wired simply as 'Janl A 15, B 1, D 3, E 5, G 4, w,; - Code words and letter designations for groups in "lch, there are no banks should, of course, be omitted. e.m is probable that distributions of the dollar inclInt of deposits on June 30, 1941, and of the changes to clePosits between June 1938 and June 1941, corresponding be rt' iables 1 and 2, i.e., four additional tables, will also ; s e ired later on; if so, you will be advised to that effe, fo' °Y telegraph. Until further notice, therefore, the barn- Shov ring the individual member nk should be information for each retained at your bank." Approved unanimously, together with the following telegram referred to in the above letter: "Please prepare form showing following information 1121 9/6/41 —4- "for each bank in your district that was a member of the Federal Reserve System on June 30, 1941: Name, location, and reserve classification of bank 1. Total demand deposits, June 30, 1941 2. Interbank demand deposits, June 30, 1941 3. Item 1 minus item 2 4. Total demand deposits, June 30, 1938 5. Interbank demand deposits, June 30, 1938 6. Item 4 minus item 5 7. Ratio of item 1 to item 4 (per cent) 8. Ratio of item 3 to item 6 (per cent) "Item 1 above is to be entered from item 7 in call repot Schedule E, and item 2 above from items 4 and 5 combined) in Schedule E. Items 4 and 5 above should be entered from call report Schedule J. All deposit figures should be entered in thousands of dollars (disregard amounts 1. 1,!der ,t500). Ratios should be carried to one point beyond "Ile decimal (for example, 143.8). 4_ "Forms for distributing the banks by amount of demand ''Posits and by ratio of June 1941 deposits to June 1938 deP°8it5 are being mailed. The frequency distributions should be ma" ill ltil rleg:aphed g in time to reach Board's offices 1?Y'Monll.daeyd September 15, to be followed later by the member bank forms. te "The forms for banks that were not members of the SysbixZ on both dates (1941 and 1938) need not be completed, dates of admission to membership should be indicated di:1:e0n- Such banks cannot be included in the frequency ,ributions. Any member bank which during the 3-year !,'lod absorbed another bank whose June 1938 figures are nolt: available should also be excluded, with explanatory pa2, unless the absorbed bank was relatively small comfi ' ed with the continuing bank. If the absorbed bank's bilglux,:es for June 1938 are available, they should be cornof the continuing bank. It is contemplated tha requested will be compiled from records in be,,Possession and that inquiry must not be made of memuaaks." Z 1122 9/6/a -5Telegram to the Presidents of all of the Federal Reserve Banks l'eacling as follows: "Board believes it would be helpful in considering broad questions of policy as to administration and reof Regulation V; if it could have current informa-Lon as to reactions of consumers and that it would also Promote good relations with trade and public if at head °ffice and through branches you would, if you have not laready done so, arrange with local merchants and lenders -E,0 ascertain what their customers think about new requirents, whether favorable or unfavorable, and why. In view decentralization of administration, it seems preferable it°1" You to have these arrangements originate with your rnk and branch as the dase may be, without making any feference to the Board. Kindly report results by letter to Board from time to time." r Approved unanimously. Telegram to all Federal Reserve Banks reading as follows: W-3l through Reg. W-39. The following are received under Regulation W, and Board's answers thereto: lat "W-31. Question: Is consumer who knowingly viotrl s or induces violation of regulation subject to crimPenalties? Answer: Knowing participation in viola011 maY subject offender to crnal penalties. 'r-32. Question: Section 8(f) line 6, do words 'any in"s1' extension of credit' mean any other extension of noZtalment credit? Answer: Words quoted include but are confined to other extensions of instalment credit. w1th0 2 -33. Question: May a new furnace be purchased bcc:ILu down payment in emergency situations? Answer: in -Mons to down payment requirements are those stated ser?eotion 6, none of which extend to the situation delbn and the exception inherent in section 5(b). basi W-34. Question: Suppose bank loans on instalment nie' „4. or otherwise to a finance company secured by instalre" contracts on listed articles. Must bank look to azgaritY of security? If bank is not required to ex' each item of collateral, what is purpose of section 1123 9/6/4i -6Answer: So long as bank's payments arise TIlY out of the loan as distinguished from the underlying obligation, it need not investigate underlying collateral. This is so that lender who takes such collateral will not be in worse position than one who lent unsecured. However, if and when lender attempts to obtain payments which arise out of the underlying obligations, -e-, to enforce the underlying obligation as distinguished Iron' the loan, the lender is forbidden to receive the payhnts unless requirements of section 3(a)(2)(B) were met. is is so that registrant who loans upon instalment obligations will not be in more favorable position than one who discounts or purchases the obligation. To extent that ! legistrant is willing to assume the business risk, he may -!-end on instalment obligation without inspection, realizng the disabilities which may appear later if it should ?ecome necessary to disregard loan and rely upon underlying Instalment obligations. See N-5. . der 64I-35. Question: If bank makes instalment loan un01,000, either secured by listed article or not secu!red at all, must bank take statement as to proposed use 1 Proceeds of loan? Answer: Registrant is not required c? take statement as to proposed use of proceeds in such 8je irrespective of whether loan is secured by listed r,1°1e. However, statement accepted in good faith by istrant will protect registrant as mentioned in 8(c) g in similar provisions. Question: May bank make loan secured by do8'ed article owned more than 45 days in order to make 8(11/. payment on new listed article? Answer: Section ' a81) does not prohibit making a loan which will serve is d°wn payment. It merely applies to registrant who 1:; _r.equired to obtain the down payment (or required to r4lt loan to maximum credit value) and prohibits him !fl. making the extension of credit if he knows or has res 801,1 to know of side loan for making the down payment. list 4-37. Question: May bank make loan secured by peu article owned more than 45 days in order to pay ' Ari 1111 the cash purchase price of a new listed article? ewer: Yes. ler 1 44-38. Question: Customer purchases from same selchas-Listed articles on several different days. All purMentesare put on open charge account without down paywith the understanding that when last article is 1 r Z 4 Z 9/6/La -7."Purchased a definite contract will be made. If all purchases go into a single contract must the entire contract be dated back to the date of purchase of first article and must the 18 months run from that earliest date? Answer: If Intention is for instalment payments, down payments should be obtained at times of different purchases. Sim18 month maximum maturities would date from different purchases and need not go back to purchase of first article. ."1N-39. Question: When borrower makes bank loan on L'Palght note for six months not payable in instalments Is there anything in regulation to prohibit an agreement at the time of making the loan to renew the loan at the d of six months period or at subsequen due dates? t An:7er: Question is not entirely clear and answer would deeend.on all relevant circumstances. There is nothing to ohlbit agreement for renewal if renewal is to be made !Ithaut reduction. However, if agreement is that renewal e to involve a reduction, loan would seem to be instalment redlt and subject to requirements of the regulation." n r t Approved unanimously. Thereupon the meeting adjourned. 4pArov Vi e Chairman.
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