19321013_Minutes.pdf

t13, R4

A meeting of the Executive Committee of the Federal Reserve Board

1748 held in Washington on Thursday, October 13, 1932, at 4:00 p. ra.

Commi,

Reserve

Bank of Richmond advising that the board of directors, at its meeting

Illede no change in the bank's existing schedule of rates of discount4114

D4rchase.

PRESENT: Governor MeyerI:r. HaralinMr. Magee

Mr. flOrrill, Secretary1.1r. McClelland, Assistant SecretaryMr. Harrison, Assistant to the Governor

Wyatt, General CounselPaulger, Chief, Division of ExaminationsSiems, Federal Reserve Examiner.

The following matters were considered and acted upon by the

Telegramdated October 13, 1932, from the Chairman of the Federal

Without objection, noted with approval.

7e1egraPhi0

reply, approved by five members of the Board, to a tele-

aerve3'tecl October 13, 1932, rora Deputy Governor Rounds of the Federal Re-

°r New York requesting authority for the renewal, for a period

"v;11(109 --v8) with interest at the rate of 5 1/2 per annum, of the ad-

the 8110unt of .:,;5,000 made by the teederal Reserve Bank of New York,

'4e(31%laroAct with the provisions of section 10(b) of the Federal Reserve) airie

44_ nded" Under authority granted in the Board's telegram of Ally 13,to the

/101, Atlanta National Bank, Atlanta, New York; Deputy Governor

8t4--Ftn- ti

11(); that the national bank has advised that the conditions whichriseto

Ike original loan have not improved and has requested a renewal.ly

et tAawlat the Board authorizes the renewal of the advance as

-eatea.

Approved.

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lett,

033r:3. f _

-2-

Report of the Committee on Salaries and Expenditures on a letter

dated October 5, 1932, from De-Duty Governor Heim of the Federal Reserve Bank

Or ,.."as City requesting approval of a change in the personnel classifica-

tionPlan of the Omaha branch to provide for the new position of "Clerk", with

4 eale17 range of .)l,901 to .::2,400 per annum, in the Loans, Rediscounts and

4e°oPtan_ces Depar tment; the Board's Committee recomilending approval.

Approved.

Letter to Assistant Federal Reserve Agent Fletcher at the Federal

sve Bank of Cleveland referring to his reply of October 5 to the Board's

r Or SepteMber 28, 1932, with regard to the method of reporting theliabil.

ItY of the Central Trust Company of Cincinnati, Ohio, on certain44,0. estate Mortgage bonds sold by the Pearl I7arket Bank and Trust Company

to,vs

customers Prior to its absorption by the former institution. The

11c41r°8 letter stated that it is understood that bonds in the form inclosed

theassistant Federal reserve agent's letter, together with other bonds

bY the Pearl Earket Bank and Trust Company under similar conditions,

8°1(1 bY the bank to its customers with its express or implied guaranty

1)EtY111811t and that it did not issue its own obligations against the pledgeENQII

bonds as security, and that in the circumstances the amount of

1.1"11ity asSurfle1 by the Central Trust Company on the bonds in question

44°Illclbe reported by the companycr

kko

condition report form 105.

Approved.

as a contingent liability in Schedule C

IA

1,ez --,qeration was then given to a Inemorandtun addressed to the Fed-

erVa .14tTI,14111 -—oard by Er. R. F. Leonard, Federal Reserve Examiner, copies

ill'el1101181Y had been furnished to the members, with regard to the

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e:ce'Dlinati°n by representatives of the Comptroller's office, in which VEr.

Le°1141'd Participated, under the direction of Er. Drinnen, of the trust

cleirtraent of the Continental Illinois Bank and Trust Company, Chicago,

him'18) which was made at the request of the Board in connection with the

414.iction filed by the bank on behalf of the Continental Illinois NationalEttuak

gaci Trust Company for permission to exercise the fiduciary powerselatuote

rated in section 11(k) of the Federal Reserve Act.

11-t. Paulger reported that, in accordance with the request of the

he arrived in Chicago on Eonday, October 10, in connection with the

e:"uqinati °n 'which was begun on Thursday, October 6, and completed on TUesday,°0tober 11.

thelt en 4--ns4deration was given to the types of securities held in the differ-

trust ac

He outlined the general scope of the examination and stated

counts,°,4

stec, certain municipalIlleML it

which by the trust department4tated

that a careful check was madell'eastit

time in the determination ofthe Illethod used in reviewing the securit

(51111°11) based on information obtained

Nitarence with the officers ofN4Qies

Of the departmentYeEtr or

raore.tiQ%114

t8 is satisfactory, andtha

-Illech4nical operations ofZ1E3 a

€'1'eed with the opinion expressedorQy

have

He stated that

the

particularly the so-called Insull securities, the bank's

securities, and real estate mortgages, invest-

night be subject to criticism. He

of the procedure followed at the

investments for the various trusts and

ies purchased. He expressed the

during the examination and a subsequent

department, that the management and

been materially improved during the past

the established system for auditing the

that the examiners who

the department

made the examination

feel that it is well conducted.

in Er. Leonard's

M4 J°1% criticism that could be made

memorandum that the

was that to SOMB extent, in cases

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illwhioh the discretion was vested in the trust department, the management

'1.4M have enforced a policy of disposing of certain investments, accuired

"various trusts, which might now be held to be subject to criticism,

even th°ugh the trust department was not responsible for their purchase,bit

stated that the officers of the department felt that, in view of allthe

circumstances involved in the situation, they could not have enforced

84c4 a Policy.

had been 84gested to co-trustees and beneficiaries but had not met with

favorable reception. Paulger also stated that the officers of the

qeDartlI)ent had Promised

Be stated that he was advised that in many cases such action

to correct the criticisms listed in the report of

/lation.

Stems stated that he had gone over the report of the examina-

ti°1171111ch was furnished the Board by the Comptroller's office today, and

he 18 CT the opinion that the information set forth therein substantiateshe

etatenient made by the examiner in the confidential section of the re-

11°11 that) viewed as a whole, it is believed the trust affairs reflect an

414 exPert management and that the management is guided by con-

aelative, ethical and practical Principles.

The Secretary stated that the Acting Comptroller had recommended

"'*itite that the trust powers be granted by the Board.

Dteze

14 view of the infoiniation before them, expressed their willing-e4a t

golleral discussion ensued during which the members of the Board

O

'1)131'c)ve the application filed on behalf of the Continental Illinois

Baxac and Trust CompanY-11Doll The Secretary then left the meeting and

14t. l'et11111 reported that he had communicated over the telephone with

and had outlined to him the information presented at the meeting

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338

41gcl the favorable attitude of the members present, and that flr.Miller

had reqUested that he be recorded as approving the application.

The Secretary was then authorized to send thefollowing telegram to the Federal Reserve Agent atChicago:

"Please advise The Continental Illinois Bank and TrustC0111PanY that, effective if and when it is converted into,z! nat ional banking association and is authorized by theonptroller of the Currency to col:nonce business as theContinental Illinois rational Bank and Trust Company ofa4icago, Illinois, the Federal Reserve Board approves theapPlication filed by it on behalf of such national bank for;3ellMission to act, when not in contravention of State or

0Ell law as trustee, executor, administrator, registrar ofstooks and bonds, guardian of estates, assignee, receiver,cmamittee of estates of lunatics, or in any other fiduciaryc4PacitY in which State banks, trust companies or othercorporations which come into competition with national banksZfe Permitted to act under the laws of the State of Illinois,

exercise of all such rights being subject to the pro-J,310118 of the Federal Reserve Act and the regulations ofa"s

of

Reserve Board. The Board's approval of the0.13plcation has been given on the condition that the Board0: Lurectors of the national bank shall, after the conversion4346, The Continental Illinois Bank and Trust Company into athti°nal bank becomes effective, pass a resolution ratifyingpe:action taken by the company in making application for

ssion to exercise trust powers on behalf of the nationaland it is requested that a certified copy of the resolu-

ix:" adopted by the board of directors of the national bankforth." connection be forwarded to the Federal Reserve Boardcel..1.1t8 records as soon as possible. Formal permit andbe-;irisd copies thereof requested by counsel for bank will

'-0rwarded as soon as Comptroller issues authorization tovMmence business."

Thereupon the meeting adjourned.

l(N(;-trut, 71,w) Secretary.

4pAziove

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