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19341019

19341019

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Published by: fedfraser on Apr 24, 2014
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04/24/2014

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3217
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A meet inf, of the Federal Reserve board was held in Washington Friday# October 19, 1934* at 3*00 p. m.PRESENTt lur* ihomas, Vice Governor&r Ilamlin Mr* Miller Ur* James
h r
Szvmczak
V
Kr. Lorrill, SecretaryUr. Bethea, Assistant SecretaryKr. Carpenter, Assistant SecretaryThe Board considered and acted upon the following matters:Letter dated October 18, 1934, from fcr. Sproul, Secretary ofthe Federal Reserve Bank of New York, advising that, at a meeting of
.
the board of directors on that date, no change was made in the banks existing schedule of rates of discount and purchase.Without objection, noted with approval*Letter to Mr. Wood, Federal Reserve Agent at the Federal Re-serve Bank of St. Louis, reading as follows I"Reference is made to the report of examination of the 'Tower Grove Bank and Trust Company’, St. Louis, Missouri, as of June 11, 1954, and the supplemental information submitted in connection therewith."It has been noted that the bank has been engaged in the business of selling real estate loans and bonds to its customers and that on the date of the examination there were outstanding approximately -^14,000,000 of such securities winch are said to have been sold without recourse. In the past, the liability, actual or moral, to repurchase loans sold with or without re-course has proved harmful* if not disastrous, to many banks and the Board feels, therefore, that it is contrary to sound bank-ing practice for a commercial bank to engage in the business of issuing or selling, either with or without recourse, notes, bonds# mortgages, certificates or other evidences of indebtedness representing real estate loans or participations therein. If you have not already done so, the Board would be pleased to have you acquaL nt the bank with its views in this respect, calling specific attention to condition numbered 12 of the revised
 
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"regular conditions under which Jtute bunks are now admitted to members :dp in the System* and requost the management to give serious consideration to the advisability, as a matter oisound banking policy, of discontinuing such oulos.H,ihe oxaioiuur reports that the uianugement maintains that the West Invosunent Company and the York Investment Company, formed for the purpose of removing certain assets from the bank and its affiliate, the Tower Grove Investment Company, are not affiliates of tho bank as defined by the Banking Act of 1933• i'he examiner also reports that from the information submitted such appears to be tho case, but that from the manner in which the companies operate there appears to be more of a relationship between them and the bunk than the information given the exam-iners discloses. In view of the questions raised, it is assumed that tho determination or the status of the West Investment Company and the York Investment Company as affiliates has been referred to your counsel. According to the report, the funds amounting to ^180,000 provided for the organization of the com-panies were furnished by directors of the bank. It has been noted, however, that the bank and the directors are to share equally in any funds disbursed in the liquidation of the West Investment Company, and it will be appreciated if you will ad-vise the Board as to the relations between the bank and the company which justify, in the event of liquidation of the com-pany, an equal participation by the bank with the individuals who furnished the funds "It has been observed that the examiner has reservations as to the management but believes that Director Seller has suf-
V J
ficient influence to accomplish the correction of the criticized policies of the institution. In view of the promises of Direc-tor Sellor that the board of directors will give the necessary attention to the bank’s affairs end the correction of criticized matters, the examiner suggests that any steps which night other-wise be advisable to strengthen the management of the bank be deferred unti 1 the next examination which should be made the first part of the year. In this connection it will be appreci-ated if you will keep the Board advised as to the process made in correcting the criticized policies and practices and as to other improvements effected in the condition of the bank.Approved.Letter to Lir. 0*Connor, Comptroller of the Currency, reading
as followsi
"In accordance with Acting Comptroller of the Currency Await’s recommendation, the Federal Reserve Board approves a reduction in the common capital stock of The City National
 
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$ank of Fort Smith’, Fort Smith, Arkansas, from 0200,000 to §50,000, pursuant to a plan which provides that the bank’s capital shall be increased by the sale of $250,000 of preferred stook to tho Reconstruction Finance Corporation and/or others, and that the released capital shall be used to eliminate a cor-responding amount of losses and substandard assets, all as set forth in Mr* Await’s memorandum of ilay 28, 1934*"In considering the plan under which the reduction in com-mon capital is to be effected, it was noted that the management of this institution is subject to severe criticism* It is understood, however, that this matter is receiving the attention of your office."Approved•Telegram to &r* Stevens, Federal Reserve Agent at the Federal Reserve Bank of Chicago, stating that the Board has given considera-tion to the application of the "Wisconsin Bankshares Corporation", Milwaukee, Wisconsin, for a voting permit under the authority of sec-tion 5144 of the Revised Statutes of the United States, as amended, entitling such organization to vote the stock which it owns or con-trols in the "First Wisconsin Rational Bank of Milwaukee", Liilwaukee,Wisconsin, and has authorized the issuance of a limited permit to the applicant for the following purposes*"At any time prior to December 31, 1934, to act upon a proposal or proposals to reduce the common capital stock of First Wisconsin Kational Bank of Lilwaukoe from $10,000,000 to $5,000,000 and to create and issue preferred stock in the amount of $10,000,000, and to make such amendments to the articles of association and by-laws of such bank as may be necessary for such purposes, pursuant to a plan which shall be approved by the Comptroller of the Currency, the Federal Heserve Agent at the Federal Reserve Bank of Chicago, and the Federal Reserve Board."The telegram also authorized the agent to have prepared by counsel for the Federal reserve bank, and to issue to the Wisconsin Bankshares
Corporation, a limited voting permit in accordance with the telegram*

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