SEC. 405. (a) Section 8 of the Act of October 15, 1914, entitled "An Act to supplement existing laws against unlawful restraints and monopolies, and for other purposes" (15 U.S.C. 19, relating to interlocking directorates) is amended (A) by inserting "or the Secretary of the Treasury" immediately after "entered into an agreement with the Board of Governors of the Federal Reserve System" and (B) by striking out "Board of Governors of the Federal Reserve System" the first time and the last time it appears therein and inserting "Secretary of the Treasury" in lieu thereof both times.

(b) Subsection (a) of section 11 of such Act (15 U.S.C. 21(a), relating to authority for enforcement) is amended by striking out "Federal Reserve Board" and inserting "Secretary of the Treasury".

SEC. 406. Subsection (b) of section 321 of the Trust Indenture Act of 1939 (15 U.S.C. 77uuu (b), relating to availability of records to the Securities and Exchange Commission) is amended (A) by striking out "the Comptroller of the Currency," (B) by inserting "and the" immediately after "Federal Reserve System,", and (C) by striking out "Federal Deposit Insurance Corporation".

SEC. 407. Paragraph (4) of subsection (c) of section 3 of the Investment Company Act of 1940 (15 U.S.C. 80a-3 (c) (4)) is amended (A) by striking out "Board of Governors of the Federal Reserve System" and inserting "Secretary of the Treasury", (B) by striking out "such Board" the first time it appears and inserting "the Board of Governors of the Federal Reserve System", (C) by inserting "or the Secretary of the Treasury" immediately after "thereafter issued to it by the Board of Governors", and (D) by striking out "such Board" the second time it appears and inserting "the Secretary of the Treasury".

SEC. 408. The second paragraph of section 212 of title 18 of the United States Code (prohibiting offer or loan or gratuity to bank examiner) is amended (A) by striking out "by the Comptroller of the Currency, by the Board of Governors of the Federal Reserve System, by a Federal Reserve agent, by a Federal Reserve bank or" and (B) by striking out "Federal Deposit Insurance Corporation" and inserting "Secretary of the Treasury”.

SEC. 409. The second paragraph of section 655 of title 18 of the United States Code (prohibiting theft by bank examiner) is amended (A) by striking out "by the Comptroller of the Currency, by the Board of Governors of the Federal Reserve System, by a Federal Reserve agent, by a Federal Reserve bank or" and (B) by striking out "Federal Deposit Insurance Corporation" and inserting "Secretary of the Treasury”.

SEC. 410. Section 657 of title 18 of the United States Code (prohibiting embezzlement of and theft from certain lending, credit, and insurance institutions) is amended by striking out "Federal Deposit Insurance Corporation” and inserting "Secretary of the Treasury”.

SEC. 411. The third paragraph of section 1005 of title 18 of the United States Code (relating to bank entries, reports, and transactions) is amended by striking out "Comptroller of the Currency, or the Federal Deposit Insurance Corporation" and inserting "Secretary of the Treasury”.

SEC. 412. Section 1006 of title 18 of the United States Code (relating to Federal credit institution entries, reports, and transactions) is amended by striking out "Federal Deposit Insurance Corporation" and inserting "Secretary of the Treasury".

SEC. 413. Section 1007 of title 18 of the United States Code (relating to Federal Deposit Insurance Corporation transactions) is amended (A) by inserting "the Secretary of the Treasury to direct" immediately after "for the purpose of inducing" and (B) by inserting "the Secretary of the Treasury or" immediately after "influencing in any way the action of".

SEC. 414. (a) Section 1906 of title 18 of the United States Code (prohibiting disclosure of information by bank examiner) is amended by striking out “Comptroller of the Currency as to a national bank, the Board of Governors of the Federal Reserve System as to a State member bank, or the Federal Deposit Insurance Corporation as to any other" and inserting "Secretary of the Treasury as to any”. (b) The amendment made by subsection (a) of this section shall not be construed as invalidating any permission properly obtained from the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, or the Federal Deposit Insurance Corporation prior to the effective date of such amend

ment.

SEC. 415. Section 1909 of title 18 of the United States Code (prohibiting examiners from performing other services) is amended by striking out "a nationalbank examiner, Federal Deposit Insurance Corporation examiner," and inserting "an examiner employed by the Secretary of the Treasury".

SEC. 416. The amendments made by sections 408 through 415 of this Act shall not apply with respect to any acts committed prior to the effective date of such sections.

SEC. 417. The first section of the Act of June 24, 1938, entitled "An Act to authorize the deposit and investment of Indian funds" (25 U.S.C. 162a) is amended by striking out "Board of Directors of the Federal Deposit Insurance Corporation" and inserting "Secretary of the Treasury”.

SEC. 418. Section 1348 of title 28 of the United States Code (relating to jurisdiction of district courts in actions involving national banks) is amended by striking out "Comptroller of the Currency" and inserting "Secretary of the Treasury".

SEC. 419. (a) Section 1394 of title 28 of the United States Code (relating to venue of actions to enjoin the Comptroller) is amended by striking out "Comptroller of the Currency" and inserting "Secretary of the Treasury".

(b) The title of such section is amended by striking out "Comptroller of Currency" and inserting "Secretary of the Treasury".

(c) The table of sections at the beginning of chapter 87 of such title is amended by striking out

"1394. Banking association's action against Comptroller of Currency." and inserting

"1394. Banking association's action against Secretary of the Treasury."

SEC. 420. Section 3547 of the Revised Statutes (31 U.S.C. 363, providing for assay commissioners) is amended by striking out "the Comptroller of the Currency,".

SEC. 421. Section 210 of the Social Security Act (42 U.S.C. 410, relating to definition of employment) is amended by adding at the end thereof the following new subsection:

"Service Performed by Certain Former Federal Reserve Employees

"(p) The term 'employment' shall not include service creditable for the purposes of the Civil Service Retirement Act pursuant to section 3(k) of that Act in the case of any person meeting the eligibility requirements of section 3(f) of that Act."

SEC. 422. Section 73 of the Act of January 12, 1893 (44 U.S.C. 295, relating to distribution of copies of the report of the Comptroller of the Currency), is amended by striking out "Comptroller of the Currency" both times it appears.

[H.R. 7133, 89th Cong., 1st sess.]

A BILL To amend the Federal Reserve Act, the Federal Deposit Insurance Act, and section 5155 of the Revised Statutes, as amended, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the third paragraph of section 9 of the Federal Reserve Act, as amende d (U.S.C., title 12, sec. 321, third paragraph), is further amended by striking from the first sentence the words "Board of Governors of the Federal Reserve System instead of the Comptroller of the Currency", and inserting in lieu thereof the words "Federal Deposit Insurance Corporation." SEC. 2. Section 18 (d) of the Federal Deposit Insurance Act (12 U.S.C. 1828 (d) is amended to read as follows:

"(d) No insured bank shall establish any new branch unless it shall have the prior written consent of the Corporation. The Corporation may grant such consent only after an application therefor has been approved by either the Comptroller of the Currency (in the case of a national or district bank) or by the appropriate supervisory State authority (in the case of a State bank). In granting or withholding such consent the Corporation shall consider the report of investigation made by either the Comptroller of the Currency (in the case of a national or district bank) or the appropriate supervisory State authority (in the case of a State bank) in approving such new branch. The factors to be considered by the Corporation in granting or withholding its consent under this subsection shall be those enumerated in section 15 of this Act."

SEC. 3. Subsection (c) of section 5155 of the Revised Statutes of the United States (12 U.S.C. 36 (c)) is amended by inserting after "Comptroller of the Currency" in the first and second sentences thereof the following: "and subject to the provisions of section 18 (d) of the Federal Deposit Insurance Act".

SEC. 4 (a) Subsection (b) of section (4) of the Federal Deposit Insurance Act (12 U.S.C. 1814) is amended to read as follows: "on and after the effective date of this amendment, and subject to the requirements of subsection (c) of section 18 of this Act (12 U.S.C. 1828 (c)), any insured bank which (1) is converted into a national member bank or (2) is converted into a State bank, or (3) becomes a member of the Federal Reserve System, or (4) a State or National bank, resulting from the merger or consolidation of insured banks, or from the merger or consolidation of a noninsured bank or institution with an insured bank, shall continue as an insured bank.

(b) Section (5) of the Federal Deposit Insurance Act (12 U.S.C. 1815) is amended to read as follows: "Except as provided in subsections (a) and (b) of section 4 of this Act (12 U.S.C. 1814), on or after the effective date of this amendment no bank shall become, nor any existing insured bank authorized to resume business shall continue to be, an insured bank, under the provisions of this Act, except upon prior application to an approval by the Board of Directors and unless engaged in the business of receiving deposits other than trust funds as herein defined. No national bank may commence the business of receiving deposits other than trust funds as herein defined, or resume business, nor may any State bank become a member of the Federal Reserve System, or resume business as such member, unless it is an insured bank. Before approving the application of any bank, the Board of Directors shall give consideration to the factors enumerated in section 6 of this Act (12 U.S.C. 1816) and shall determine upon the basis of a thorough examination of such bank, that its assets in excess of its capital requirements are adequate to enable it to meet all of its liabilities to depositors and other creditors as shown on the books of the bank."

(c) Section (6) of the Federal Deposit Insurance Act (12 U.S.C. 1816) is amended to read as follows: "The factors to be considered by the Board of Directors under section 5 (12 U.S.C. 1815) shall be the following: The financial history and condition of the bank, the adequacy of its capital structure, its future earnings prospects, the general character of its management, the convenience and needs of the community to be served by the bank, and whether or not its corporate powers are consistent with the purpose of this Act."

REORGANIZATION OF FEDERAL BANK

SUPERVISION

A Staff Analysis and Comparison of H.R. 107 and H.R. 6885

Introduction

The analysis which follows has been prepared for the information and convenience of the Members of the Subcommittee on Bank Supervision and Insurance of the House Committee on Banking and Currency and the witnesses testifying before it on H.R. 107 and H.R. 6885.

It is the purpose of this analysis to summarize, in a sufficient factual context to make them understandable, the legal results intended to be achieved by the proposed legislation. It is not, however, an independent evaluation of the success of the draftsmen of the bills in achieving those results, nor should it under any circumstances be construed as an expression of opinion as to the merits.

Administrative reorganization is the keynote of both bills. It is important to recognize at the outset that neither bill is in any sense a revision or codification of statutory provisions governing the rights, benefits, and obligations (other than for the payment of assessements) of State and national banks under Federal law. They are concerned solely with the governmental agencies through which the banking laws are administered. Even in the area of administration, the bills make no change in the procedural rights of the banks; for example, as to all matters with respect to which the banks now have a right to an administrative hearing and judicial review, such rights are carefully preserved.

Recommendations by witnesses for the improvement of the bills will be welcomed, however, regardless of whether such recommendations may involve changes in substantive law.

56

Survey of Existing Agencies

The Comptroller

The oldest of the Federal banking agencies is the Office of the Comptroller of the Currency, which was created by the National Currency Act of 1863. The national banks, holding more than half of all deposits in commercial banks, all receive their charters from the Comptroller and are examined and supervised by him. Except for his very limited currency functions mentioned below, the Comptroller has no duties other than bank supervision, including the administrative adjudication of merger, consolidation, and branching applications. All officials and employees in the Office of the Comptroller act under his supervision.

The Federal Reserve System

What is now the Federal Reserve System was begun in 1913 by the enactment of the Federal Reserve Act. At its summit is the Board of Governors, whose seven members are appointed by the President, by and with the advice and consent of the Senate, for staggered terms of fourteen years each. There are twelve Federal Reserve districts, in each of which is located a Federal Reserve bank. Each Federal Reserve bank, under the general supervision of the Board of Governors, has authority to examine and to exercise certain supervisory powers over the member banks in its district. In addition, the Board of Governors has power to examine, and supervisory jurisdiction over, all member banks.

State bank membership in the Federal Reserve System is optional. Although membership is required of national banks, the Federal Reserve does not, in general, exercise its authority to examine them. It does, of course, require that they comply with its reserve requirements, but this is generally considered to be in implementation of the monetary policy functions of the Federal Reserve, rather than an aspect of bank supervision. The reserve requirements referred to are the percentage of each member bank's deposit liabilities which it must keep on deposit with the Federal Reserve bank of its district.

The Board of Governors also is charged with the adminisstration of the Bank Holding Company Act of 1956. Under that Act, the Board's approval is required for the establishment or expansion of bank holding companies, and they are subject to supervision by the Board.