COMPTROLLER OF THE CURRENCY-Continued Comparative statement of financial condition, Dec. 31, 1953-63-Continued Salaries. Material transportation_ Communications. Depreciation of furniture, fixtures, and equipment.. Machine repairs, service, and installation expense. Assessments of national banks. Trust examinations, other special bank examinations, and branch, new char Subscriptions to National Banking Review. Administrative charges to Federal Reserve issue and redemption fund. 1 Breakdown not available for 1956 and prior years. 2 Income from sale of reports included in income from bank assessments. 3 Expense items of this nature included in miscellaneous expense. NOTE. Based on audit reports submitted by Division of Internal Audits, Bureau of Accounts, Treasury Department, but summarized and revised by committee staff based on information received from Treasury Department employees and on details in certain audit reports. The CHAIRMAN. I notice here you have a Comptroller's equity, $3,626,000-some odd. Is that money that you have accumulated over the years, Mr. Saxon, that has not been-from the assessments? Mr. SAXON. That is excess of the assessment income over the expenditures and sought in amount to be sufficient to cover a period of expenditure during an emergency where it might be difficult if not impossible to make assessments. The CHAIRMAN. And that is under the Comptroller's jurisdiction, of course. Mr. SAXON. Yes, sir. The CHAIRMAN. And who determines the expenses of the Comptroller's Office? Mr. SAXON. As to the employment and payment of The CHAIRMAN. Well, also any expenses that come up. The CHAIRMAN. And the Secretary of the Treasury doesn't have anything to do with that? Mr. SAXON. The Secretary of the Treasury has an audit made annually of all of our operations, financial operations, through the Commissioner of Accounts. The CHAIRMAN. I see. Mr. SAXON. For which we pay. The CHAIRMAN. Now, Mr. Saxon, of course, you have been issuing a lot of regulations and, under the law, I believe it is permissible for you to do that and file them with the Federal Register. When they are printed in the Federal Register they become the same as law, insofar as carrying out your duties is concerned. Mr. SAXON. Yes, sir. The CHAIRMAN. Now, you know, a few years ago there was before Congress what was known as the Financial Institutions Act. It never became law. Mr. SAXON. Yes. The CHAIRMAN. I believe you had a little something to do with that. Mr. SAXON. Yes. The CHAIRMAN. You were secretary of the committee that spearheaded it. And you successfully got it through the Senate and it came to the House. Mr. SAXON. Yes, sir. The CHAIRMAN. That bill really amounted to a recodification of all the laws concerning banking and Mr. Multer and I found many things in there that we didn't like, that it was going too far and the bill before us did not pass. Now, after that, when you became Comptroller of the Currency, you selected an advisory committee, I believe? Mr. SAXON. Yes, sir. The CHAIRMAN. That advisory committee is composed of practically all national bankers, aren't they? Mr. SAXON. Yes, all but three, sir. The CHAIRMAN. How many members in all? Mr. SAXON. 25. The CHAIRMAN. I believe Mr. McKinney out in Indianapolis is chairman. Mr. SAXON. He was. It has now been disbanded for some year and a half. The CHAIRMAN. But that advisory committee published "National Banks in the Future." Is that correct? Mr. SAXON. Yes, sir. The CHAIRMAN. About 189 or 190 pages and they made recommendations what to do and, if my information is correct, having had some knowledge of the Financial Institutions Act, and having gone over this book hurriedly, I discover that the regulations that you have made include practically all of the recommendations made by this committee of national bankers except three, which were in the Financial Institutions Act, but did not become a law. I just wondered about why that was done, and I have in my possession here a compilation of 29 documented instances, not necessarily exhaustive, of actions by the Comptroller of the Currency of doubtful legality and poor policy. If you have these copies available, suppose you distribute them to the members of the committee. (The information referred to follows:) ACTION TAKEN BY THE COMPTROLLER OF 1. Appointment of seven Deputy Comptrollers of the Currency. 2. Advised that the right of shareholders to have access to a national bank's shareholder list is subject to bank management's own determination that the application to inspect is in "good faith" and that management may refuse inspection where it is satisfied that the request does not meet this test. 3. Ruled (par. 7445 of Comptroller's Rulings) that national banks may establish charitable foundations and make COL.Cributions thereto. 4. Ruled (par. 7480) that national banks may contribute to and invest in the stock of local development corporations. 5. Ruled (par. 5015) that national banks may establish employee stock option plans. 6. The Comptroller, for about 1 year beginning February 1964, did not permit access to examination reports of national banks to the Federal Deposit Insurance Corporation. 7. Ruled (par. 1130) that transactions in "Federal funds” are “purchases and sales" rather than "loans and borrowings" and therefore are not subject to the statutory restrictions contained in 12 U.S.C. 82 and 84. LEGALITY Direct violation of title 12, United States Code, section 4, which states that the Secretary of the Treasury shall appoint no more than four deputy Comptrollers of the Currency. Violates provision in title 12, United States Code, section 62, that national banks maintain at all times a list of stockholders subject to examination by creditors and stockholders of the bank. Not provided by law and conflicts with the provisions in paragraph 8 of title 12, United States Code, section 24, and paragraph 7 of the same section which prohibits the purchase by a national bank of shares of stock of any corporation unless expressly otherwise permitted. Not provided for by law and violates title 12, United States Code, section 24, of the Revised Statutes prohibiting purchases of stock of any corporation. Not provided by law nor permitted by any previous Comptroller. Direct violation of express provisions contained in title 12, United States Code section 1817(a) (2). Contrary to rulings of previous Comptroller and the provisions of title 12, United States Code, sections 82 and 84. ACTION TAKEN BY THE COMPTROLLER OF THE CURRENCY 8. Ruled (par. 7510) that national banks may accept savings deposits from any class of depositor, even including profitmaking corporations. 9. Ruled (12 CFR 20) that national banks be required to give prior notification to the Comptroller of the Currency with respect to any overseas operations and file reports with respect thereto. 10. Permits national banks to acquire directly stock in foreign banks as a "lawful exercise of the corporate powers of a national bank." 11. Issued reporting, disclosure, and proxy solicitation regulations (12 CFR 10, 11, 12, and 16) which fail to impose adequate standards of disclosure for the protection of bank shareholders and the general public interest, particularly with respect to management self-dealing. 12. Permitted national banks to purchase the stock of mortgage companies and to operate same as "incidental to banking." 13. Ruled (par. 7475) and otherwise permits national banks to purchase the stock of travel agencies and to operate same as "incidental to banking." 14. Ruled (par. 7100) that national banks may act as insurance agents at in a community of less than 5,000 population, irrespective of the size community in which the bank's home office is any class of depositors, even including located. 15. Ruled (par. 7110) that pursuant to "authority" under 12 U.S.C. 24, 84, and 371, national banks may act as agents in the sale of insurance incidental to banking transactions (without regard to community population). 16. Ruled (par. 7495) that national banks may underwrite credit life insurance policies-acting as insurors-including establishing underwriting experience loss reserves. LEGALITY Contrary to Federal Reserve Board regulation (12 CFR 217.1(e)), promulgated under statutory authority contained in 12 U.S.C. 461 empowering the Federal Reserve Board with general authority over savings deposits. Amounts to dual regulation contrary to section 25 of the Federal Reserve Act (12 U.S.C. 601) which vests the Federal Reserve Board with complete authority to regulate the foreign operations of all member banks, including national banks. Contrary to the Edge Act which only indirectly permits an equity interest in foreign banks; contrary to Federal Reserve Board Ruling 1000 promulgated under the authority of 12 U.S.C. 601 and contrary to 12 U.S.C. 24 prohibiting corporate stock purchases by national banks. Contrary to the intent of Congress as expressed in the Securities Acts Amendments of 1964 and does not approach the disclosure standards contained in the FRB-FDIC regulations. Not provided by law and also violates paragraph seventh, 12 U.S.C. 24, prohibiting corporate stock purchases by national banks. Not provided by law and also violates paragraph seventh, 12 U.S.C. 24, prohibiting corporate stock purchases by national banks. Title 12, United States Code, section 92 was removed from the United States Code in 1918, and this ruling is, in any case, contrary to rulings by previous Comptrollers. Not provided by law, and contrary to rulings by previous Comptrollers. Not provided by law. |