Richmond times-dispatch. [volume] (Richmond, Va.) 1914-current, 1915-06-10
DISCRETIONARY POWER
IS RETAINED BY BOARD
1t Reserves Right to Say What
Banks and Trust Companies
Shall Join Reserve System.
FOR QUALITY, NOT QUANTITY
Rules and Regulations Governing
Admission OF State Institutions
Observation-Disclosures VIII BE
Scrutinized Before Approval.

WASHINGTON, June 9-Rules and
| regulations to govern the State banks
ana trust companies In the Federal re-
serve system were made public to-day
by the Federal Reserve Board. In an
nouncing the regulations under which
the right lis reserved to exercise jude
ineht ana discretion in considering each
individual application. the board said
Appreciating fully that the strength
or the Federal reserve system is to be
mea sured only by the quality and char
acter OF its members rather than by
their number the Federal Reserve
Board is prepared to use the broad, dis
cretionary power vested in it by the
Federal reserve act to bring about the
coordination of the different types OF
banking institutions on basis OF
equity and practicability. The board
has sought. in the regulations govern
ing the admission of State banks and
trust companies, to establish only such
reasonable standards of admission as
Will be generally recognized as neces-
sary TO protect the Federal reserve sys-
tenn and the national banks whose
membership in the system Is obliga-
tory, against the admission OF any bank
which would be. source OF weakness
rather than OF strength. and to pre-
scribe such regulations governing their
conduct S Will insure a reasonable con-
formity 10 fundamental principles
deemed essential to the success OF the
new banking system"
BANKS THAT ARE ELIGIBLE
TO BECOME MEMBERS
The regulations make eligible banks
and trust companies incorporated un-
DER state laws having paid up capital OF
$4,000 in towns Of 5000 or less; $50
600 in towns of from 5000 to 5000:
100000 in towns Of from 5000 to So
600: and 100000 in cities Of more than
$4,000. such banks would be allowed
TO ask for reserve bank stock to the
amount or per cent of the capital and
surplus OF the applying bank. Then
the application would be investigated
by committee consisting of the dis
tr!ct Federal reserve agent, the gov
ernor OF the reserve bank and n direc-
tor of the reserve bank. whose recon-
mendation would be submitted to the
Federal Reserve Board
In passing on the application tba
Following points Will be especially con-
sidered:
The financial condition OF the apply-
ing oank or trust company and the
general character OF it's management.
neither the nature Of the banks
chartcr provisions are consistent with
the proper conduct OF the business OF
the banking and membership in the
Federal reserve system:
Whether the laws OF the State in
which the applying bank is located
contains provisions likely to interfere
with the proper regulation and SUPER
vision of member banks"
WILL IMPOSE CONDITIONS
TO INSURE COMPLIANCE
In issuing certificate OF approval
such conditions las will insure commit
the regulations"
state banks entering the system will
be allowed to invest only In loans on
real estate and mortgages of a charac-
ter ana TO an extent which, considering
the nature OF its liza bilities. will not i'm
pair its liquid condition" and shall
maintain such improvements and
changes In its banking practice as may
nave been specifically required of 81 bv
the Federal Reserve Board as a condI-
tion or It's administrations"
Loans by bank on its own stock. or
70 a single borrower. would be limited
10 per cent of its capital and surplus
or 30 per cent OF Its unimpaired capital
A method is provided for State banks
withdrawing from the system on
twelve months notice. The board an
nounces its intention OF accepting ex
aminations of State banks by the state
authorities when conditions are satIs
factory.