required of such banks are contained in the third, fourth, and fifth paragraphs of section 19 of the Federal Reserve Act, reading as follows: "(a) If not in a Reserve or central Reserve city, as now or hereafter defined, it (the member bank) shall hold and maintain with the Federal Reserve bank of its district an actual net balance equal to not less than 7 per centum of the aggregate amount of its demand deposits and 3 per centum of its time deposits. (b) If in a Reserve city, as now or hereafter defined, it shall hold and maintain with the Federal Reserve bank of its district an actual net balance equal to not less than 10 per centum of the aggregate amount of its demand deposits and 3 per centum of its time deposits: Provided, however, That if located in the outlying district of a Reserve city or in territory added to such a city by the extension of its corporate charter, it may, upon the affirmative vote of five members of the Board of Governors of the Federal Reserve System, hold and maintain the Reserve balances specified in paragraph (a) hereof. "(c) If in a central Reserve city, as now or hereafter defined, it shall hold and maintain with the Federal Reserve bank of its district an actual net balance equal to not less than 13 per centum of the aggregate amount of its demand deposits and 3 per centum of its time deposits: Provided, however, That if located in the outlying districts of a central Reserve city or in territory added to such city by the extension of its corporate charter, it may, upon the affirmative vote of five members of the Board of Governors of the Federal Reserve System, hold and maintain the reserve balances specified in paragraphs (a) or (b) thereof." The above provisions have been repeated, in substance, in subsection (a) of section 2 of the Board's Regulation D, and the following paragraph has been added: "For the purposes of this subsection and of paragraph (1) of subsection (a) of section 3 of this regulation, a member bank shall be considered to be in a central Reserve city if the head office or any branch of such bank is located in a central Reserve city, and a member bank shall be considered to be in a Reserve city if the head office or any branch thereof is located in a Reserve city and neither the head office nor any branch thereof is located in a central Reserve city: Provided, That, if a member bank is considered to be in a central Reserve city or a Reserve city under this paragraph solely by reason of the location of an office of such bank in an outlying district of such a city or in territory added to such city by the extension of the city's corpo rate limits, such bank may, upon the affirmative vote of five members of the Board of Governors of the Federal Reserve System, be permitted to maintain lower reserve balances as above provided in this subsection." The Board has also advised the Federal Reserve banks that, as a matter of general policy, it is disposed to grant permission to any member bank located in an outlying district of a central Reserve or Reserve city to carry reduced reserves provided the character of its business is typical of banks located in and serving primarily outlying communities of such cities. It has also requested that the Federal Reserve banks, in submitting an application of a member bank in a central Reserve or Reserve city for permission to carry reduced reserves, furnish a full statement of the facts upon which the Federal Reserve bank bases its recommendation, including the following items: Demand deposits excluding interbank. Time deposits excluding interbank. Number and amount of interbank deposit accounts. Total deposits. Number, amount, and nature of large deposit accounts. Whether the bank has established any branches in the downtown financial section of the city or elsewhere. Distance of the bank from what is generally regarded as the downtown business and financial district of the city. Distance of the bank from nearby banks, and whether such banks have permission to carry reduced reserves. In acting upon an application, the Board takes into consideration the data supplied by the Federal Reserve bank, its views and recommendations, and an analytical memorandum, prepared by a member of the Board's staff conversant with the subject matter, summarizing the available data as well as the reserve status of all member banks in the given city. Particular note is made in the Federal Reserve bank's letter and the staff memorandum of two factors: The location of the bank and the extent, if any, to which it is engaged in correspondent banking, a type of business that is conducted for the most part by banks subject to the reserve requirements prescribed for central reserve and reserve city banks. The desired list of banks granted permission during the last 5 years to carry reduced reserves is attached. List of member banks in central reserve and reserve cities granted permission during the period July 1, 1952, to Aug. 15, 1957, to maintain lower reserves than normally required of such banks A. BANKS IN CENTRAL RESERVE CITIES GRANTED PERMISSION TO MAINTAIN THE SAME RESERVES AS REQUIRED OF RESERVE CITY BANKS! B. BANKS IN RESERVE CITIES GRANTED PERMISSION TO MAINTAIN THE SAME RESERVES AS REQUIRED OF BANKS LOCATED OUTSIDE CENTRAL RESERVE AND RESERVE CITIES 1 Excludes permission granted to 1 bank while in process of organization, which the organizers later decided not to open for business. 2 Reserves required on a given day are based on deposits at the opening of business on that day, which is the same as close of business the preceding day. Since the date of the official midyear call report of condition was June 6, 1957, the computed required reserve (based on deposits at the close of business on June 6) is actually the amount required to be kept on the next day, June 7. This is also true of the computed reserve which would have been required if the bank were subject to the normal reserve requirements applicable to the city in which it is located. Deficiencies in reserves are computed on the basis of weekly aver ages of daily figures in the case of central reserve and reserve city banks and semimonthly averages in the case of other member banks. 3 The bank is no longer in existence. Same as actual required reserve because the reserve city designation of Cedar Rapids was terminated effective Mar. 1, 1957. The required reserve of this bank on June 7 was abnormally low. In the first half of July 1957, its daily average required reserve was $121,000, and its daily average reserve balance $140,000. The bank is a new institution, having opened for business on May 17, 1957. On June 7 it had large balances due from other banks. Since these are allowable deductions from gross demand deposits, the resulting net demand deposits and, consequently, the required reserve thereon were very low. Has a branch in Los Angeles, a reserve city; consequently, would be subject to the reserve require ments applicable to reserve city banks, in the absence of permission to maintain lower reserves. 7 Title changed Oct. 10, 1956, from Mar Vista Commercial & Savings Bank. The reserve balance reported for June 6 is abnormally low, due to the fact that the member bank had charged to its reserve account $715,000 of drafts which were still outstanding and, consequently, had not yet been charged to the member bank's reserve account by the Los Angeles branch of the Federal Reserve Bank of San Francisco. For the prescribed semimonthly reserve computation period ended June 15, 1957, the bank's reserve balance averaged $1,330,000 and its required reserve $1,316,000. Hon. WRIGHT PATMAN, BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, House of Representatives, Washington, D. C. DEAR MR. PATMAN: This is in response to your letter of August 22, regarding the status of officers and employees of the Federal Reserve System, other than the members of the Board, as public officials. The Federal Reserve banks are instrumentalities of the Government with public functions. In that sense, the officers and employees of the Federal Reserve banks are engaged in the performance of public service and hence can be considered to be public officials. However, they are not officers or employees of the United States Government and do not subscribe to the oath of office taken by officers and employees of the Federal Government. Some of the officers and employees of the Federal Reserve System, other than the Board and its staff, can be considered as public officials of the United States Government. They are the members and alternate members of the Federal Open Market Committee, and the Federal Reserve agents and assistant Federal Reserve agents at the various Federal Reserve banks. The Federal Open Market Committee is, of course, a governmental body created by the Federal Reserve Act. The Reserve bank presidents and first vice presidents who are members or alternate members of the Committee serve in a dual capacity. As such members they subscribe to the constitutional oath of office prescribed by section 16 of title 5 of the United States Code. In their capacity as officers of the Reserve banks, however, they have the different status indicated in the second paragraph of this letter. The Federal Reserve agent at each Federal Reserve bank, who is also chairman of its board of directors, acts in his capacity as Federal Reserve agent as an agent and representative of the Board of Governors and as such takes the oath of office prescribed by the above-mentioned provisions of the United States Code. For similar reasons, the Federal Reserve agent's assistants likewise subscribe to the statutory oath of office. I trust that this will supply the information you desire. Sincerely yours, C. CANBY BALDERSTON, Vice Chairman. Memorandum to Mr. Robert L. Cardon, clerk and general counsel, House Committee on Banking and Currency. From: Alfred K. Cherry. The following information is in response to Mr. Patman's four questions which you submitted to my secretary by telephone: Question No. 1. Salaries over $12,500 each of individuals of each of the 12 Federal Reserve banks and the Federal Reserve Board for the years 1947, 1952, and 1957-the number of people, not their names—receiving such salaries at each bank and the Board Number of employees and officers of Federal Reserve banks with salaries over $12,500 Number of employees and officers of the Federal Reserve Board with salaries over $12,500 Jan. 1, 1947... Jan. 1, 1952_. Jan. 1, 1957‒‒‒‒‒ 6 11 36 Question No. 2. Total amount paid by Federal Reserve banks and the Federal Reserve Board into retirement funds in the System—this to be a total figure from the time the retirement plan was established in 1934 to date; also the same information about total amount paid by employees during that time The total amount contributed by the Federal Reserve banks and the Board in the period from 1934, when the retirement system was established, through June 30, 1957, amounts to $117,773,705.37. In addition, the Board contributed on July 1, 1957, the following amount to fund the accrued liability arising from the acceptance of the provisions of the Johnston Act in the Board plan of retirement: $2,224,897. In the same period from 1934 to June 30, 1957, the members of the Retirement System contributed a total of $63,640,346.19. It should be noted that the contributions of the employing banks include provisions for service rendered prior to 1934, but after age 21, for all members of the retirement system. It should also be noted that the total contribution of members does not reflect the withdrawals for death in service and withdrawals occasioned by separations. Question No. 3. Amount paid or authorized by the banks and/or the Board during the year 1957 to retirement funds The retirement system is on a fiscal-year basis ending February 29, and the amounts contributed for January and February are included in the figure in response to question No. 2. The following amounts have been paid by bank and Board contributions for the months of March, April, May, and June of 1957: $1,707,054.68. During this same period the members paid $1,395,227.14. In addition, the July 1, 1957, payment for the Board's accrued liability for the Johnston Act has been made as noted in response to question No. 2 above: $2,224,897. For purposes of comparison with the current year's figures, the following figures are supplied for the full fiscal year ended February 28, 1957: Bank and Board contributions___ - $5, 561, 015. 70 4, 586, 903. 30 Question No. 4. Cafeteria and/or other restaurant and eating places' receipts and losses during the year 1956 for each one of the banks and the Board. If eating facilities operated by lessee, losses sustained will be adequate information. See attached sheet for cafeteria receipts and losses for the Federal Reserve banks for the year 1956. The Federal Reserve Board's cafeteria receipts and losses for the year 1956 are as follows: Total cafeteria___. Cafeteria receipts--. Net losses, cafeteria____ $122, 269. 19 75, 178. 73 47, 090. 46 |