Full text of Marriner S. Eccles Papers : To Chairman Eccles, Box 8, Folder 8, Item 6

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BOARD OF GOVERNORS
OF THE

FEDERAL RESERVE SYSTEM

Office Correspondence
Tn

Chairman Tuples

Date APm 15,
Subject:

Frrnn Mr. Morrill

Following your talk with me recently in your office
regarding reorganization proposals, Mr* Vest, Mr* Hackley and I
have worked upon outlines which are set forth in the attached
preliminary and confidential memorandum of three alternative
proposals.
"When we talked about this, you said that you would
want t o call in Mr. Vardaman to go over these proposals with the
staff members who have been working on them. However, I have not
sent a copy to Mr. Vardaman and w i l l await your instructions before doing so*

Attachment
ccj Mr. Vest




PRELIMINARY AND CONFIDENTIAL

PROPOSALS FOR REORGANIZATION OF FEDERAL BANKING AGMCIES

There are outlined below three alternative proposals for
reorganization of the Federal banking agencies pursuant to the Reorganization Act of 1945, the proposals being identified as Proposals
A, B, and C:
PROPOSAL A

(One Plan)

NOT AFFECTING FDIC—RETAINING COMPTROLLER OF CURRMCY---AND
TRANSFERRING CERTAIN FUNCTIONS OF COMPTROLLER TO BOARD OF GOVERNORS
1. Comptroller as FDIC director» -The function of the
Comptroller of the Currency as a member of the board of directors of
FDIC and of the Acting Comptroller of the Currency as a member of that
board in the absence of the Comptroller would not be affected by this
Plan.
2. Comptroller as member of Board* - The Comptroller of the
Currency would be designated as a member ex officio of the Board of Governors, but with a provision that this function should not devolve upon
the Deputy Comptroller during the absence or inability of the Comptroller.
The presently vacant office of the member of the Board of Governors, the
term of which would expire on January 51, 1952, would be abolished, so
that the Board would continue to consist of seven members.
5. Deputy Comptrollers. - The Office of the Assistant Deputy
Comptroller of the Currency and the Office of the Third Deputy Comptroller of the Currency would be abolished, thus leaving only one Deputy
Comptroller of the Currency.
4. Transfer of Bureau of Comptroller of Currency. - The Bureau
of the Comptroller of the Currency in the Department of the Treasury would
be transferred to the Board of Governors of the Federal Reserve System
and would thereafter be knora as the Office of the Comptroller of the
Currency.
5. Functions under supervision of Board. - Certain functions
of the Comptroller of the Currency would continue to be exercised by
the Comptroller, but under the direction and supervision of the Board
of Governors, except as indicated in paragraphs 1, 6, 7 and 8 hereof.




-26. Functions transferred to Board. - All functions of the
Comptroller with respect to national banks which are similar to functions
exercised by the Board with respect to State member banks would be transferred directly to the Board of Governors and would thereafter be exercised by the Board. This would include such functions as the approval
of branches and regulation of securities investments.
7. Examinations. - All fmotions of the Comptroller with
respect to the examination of national banks and the assessment of expenses of examination against national banks and their affiliates and
against banking institutions in the District of Columbia would be
abolished.
This would eliminate existing duplication of authority with
respect to examinations of national banks, since the Board of Governors
has authority to examine such banks tinder existing law. It would
eliminate also the necessity for making two examinations a year of each
national bank and the mandatory assessment of expenses for such examinations, thus leaving it discretionary with the Board as to when examinations need to be made and as to whether the expenses thereof should be
assessed against the banks*
Under this provision, however, the Comptroller's authority
to examine affiliates of national banks and to examine banking institutions in the District of Columbia would not be abolished, but would be
transferred to the Board of Governors by virtue of paragraph 6 above.
8. Transfer of other functions. - Certain functions of the
Comptroller would be transferred to other agencies as follows: (a)
those with respect to the supervision of building and loan associations
in the District of Columbia would be transferred to the National Housing
Agency; (b) those relating to the supervision of national agricultural credit
corporations would be transferred to the Farm Credit Administration;
(c) those relating to the liquidation of national banks and banks in
the District of Columbia, when placed in voluntary liquidation or when
receivers have been appointed, would be transferred to the FDIC; (d)
those relating to the issuance, redemption, and reg\jpLation of national
bank notes and the printing, engraving, and retiring of Federal Reserve
notes would be transferred to the Secretary of the Treasury; and (e)
those relating to the removal of directors and officers of national
banks under section 30 of the Banking Act of 1933, with respect to each
Federal Reserve district, would be transferred to the Federal Reserve
Agent in each such district.
9. Function of Secretary of Treasury. - There would be
transferred to the Board of Governors all functions of the Secretary
of the Treasury with respect to: (a) the supervision of the Office of




-3the Comptroller of the Currency; (b) personnel of that Office; (c) the
transaction of a banking business by member banks and the licensing of
such banks; and (d) the purchase by the RFC from banks of preferred
stock, capital notes, and debentures, and loans by RFC on such stock
and debentures,
^ * Personnel. - Except as transferred by the Plan to other
agencies, all personnel, books, records and property of the Comptroller
of the Currency Would be transferred to the Board. The compensation
of such personnel and the salary of the Comptroller as fixed by law
would be paid out of funds of the Board; and all such personnel would
be entitled to the same privileges, including retirement privileges,
as are accorded to other employees of the Board in like circumstances*
H # Funds. - All unexpended moneys appropriated for the
Comptroller of the Currency, not otherwise transferred by the Plan,
would be transferred to the general fund of the Treasury; and all
moneys derived by the Comptroller from assessments on national banks
and their affiliates would be administered by the Comptroller under
the supervision of the Board•
12. Objectives, - The Plan would state that its purpose is
the establishment at one point of responsibility for supervising all
banks which are members of the Federal Reserve System and that the
Board of Governors is the agency utilized to accomplish this objective.
13. Effective date. - The Plan would become effective on
the first day of the sixth calendar month following its transmission
to Congress.




-4PRELIMINARY AND CONFIDENTIAL

PROPOSAL B

(Two Plans)

PARTIAL REOROANIZATION--PLACING CHAIRMAN OP BOARD
OF GOVERNORS ON FDIC--AND ABOLISHING COMPTROLLER OF CURRENCY
To accomplish this proposal two separate reorganization plans
must be submitted. Plan No* 1 would affect the FDIC and would contain
nothing which would not affect the FDIC. Plan No. 2, involving the
Comptroller of the Currency and the Board of Governors, would be
dependent upon Plan No. 1 first becoming effective and thereupon Plan
No. 2 would be effective only when Plan No. 1 would have gone into
effect.

.1
1. Chairman and Vice Chairman of Board as directors of
FDIC» - The FDIC wouLd continue as a separate^agency of the Government.
The function of the Comptroller of the Currency as a member of the
board of directors of FDIC and his function as chairman of such board
in the event of a vacancy in the office of the chairman would be transferred to the Chairman of the Board of Governors of the Federal Reserve
System. The function of the Acting Comptroller of the Currency as a
member of the board of directors of FDIC in the event of a vacancy in
the Office of the Comptroller or during the absence of the Comptroller
would be transferred to the Vice Chairman of the Board of Governors of
the Federal Reserve System.
2. Functions transferred to Board. - All functions of the
FDIC or of its board of directors relating to insured banks with
respect to (a) establishment of branches, (b) consolidation with noninsured banks, ahd (c) payment of interest on deposits, would be transferred to the Board of Governors of the Federal Reserve System.
^# Personnel. - All personnel of FDIC engaged in duties
principally related to "the functions transferred to the Board of Governors under paragraph 2 above would be transferred to the Board cf
Governors.
4. Effective date. - The Plan would become effective on the
first day of the sixth calendar month following the month in which the
Plan is transmitted to Congress.

Plan No. 2
1. Abolition of Comptroller. - The Bureau of fh.6 Comptroller
of the Currency in the Department of the Treasury, the Office of the




-5Comptroller of the Currency, and the offices of the Deputy Comptroller
of the Currency, Assistant Deputy Comptroller of the Currency and
Third Deputy Comptroller of the Currency would be abolished. Under
the previously effective Plan No. 1, the functions of the Comptroller
and the Deputy Comptroller as member and alternate member of the
board of directors of FDIC would have been transferred to the Chairman
and Vice Chairman of the Board of Governors; and consequently Plan No.# 2,
by abolishing the offices of Comptroller of the Currency and Deputy
Comptroller, would not "affect* the FDIC*
2. Functions transferred to Board, - All functions of the
Comptroller of the Currency, other than those specified in paragraphs
3 and 4 below, would be transferred to the Board of Governors of the
Federal Reserve System.
5. Transfer of other functions. - The following functions
of the Comptroller of the Currency, with their related personnel, would
be transferred to other agencies as follows: (a) Those with respect
to the supervision of building and loan associations in the District of
Columbia would be transferred to the National Housing Agency; (b)
those with respect to the supervision of national agricultural credit
corporations would be transferred to the Farm Credit Administration;
(c) those with respect to the liquidation of national banks and District
of Columbia banks, when placed in voluntary liquidation or when receivers have been appointed, would be transferred to the FDIC; (d)
those relating to the issuance, redemption and regulation of national
bank notes and the printing, engraving, and retiring of Federal Reserve
notes would be transferred to the Secretary of the Treasury; and (e)
those relating to the removal of officers and directors of national
banks under section 30 of the Banking Act of 1933, with respect to each
Federal Reserve District, would be transferred to the Federal Reserve
Agent in such district.
4. Examinations. - The functions of the Comptroller of the
Currency with respect to (a) the examination of national banks, (b) the
assessment of expenses against national banks and their affiliates for
such examinations, and (c) the assessment of expenses of examinations
against banking institutions in the District of Columbia, would be
abolished. The Comptroller's authority to examine affiliates of national banks and to examine banking institutions in the District of
Columbia would not be abolished but would be transferred to the Board
of Governors by virtue of paragraph 2 above*
5. Personnel. - Except as transferred by the Plan to other
agencies, all personnel, books, records and property of the Comptroller
of the Currency would be transferred to the Board. The compensation of
such personnel would be paid out of funds of the Board; and all such
personnel would be entitled to the same privileges, including retirement privileges, as'are accorded to other employees of the Board in
like circumstances.



-66. Functions of Secretary of Treasury* - All functions of
the Secretary of the Treasury with respect to the supervision of the
Office of the Comptroller of the Currency and with respect to the personnel of that Office would be abolished. Functions of the Secretary
of the Treasury with respect to (a) the transaction of banking business
by member banks and the licensing of such banks and (b) the purchase by
RFC from banks of preferred stock, capital notes and debentures, and
loans by RFC on such stock or debentures would be transferred to the
Board of Governors•
1. Effective date* - This Plan would become effective
immediately after, and only in the event that, Plan Io. 1 under this
Proposal B shall have gone into effect.




-7PRELIMINARY AM) CONFIDENTIAL

PROPOSAL C

(Two Plans)

COMPLETE REORGMIZ^ON--SUBSTITUTING BOARD OF GOVERNORS FOR
BOARD OF DIRECTORS OF FDIC--AND ABOLISHING COMPTROLLER OF CURRENCY
This proposal, like Proposal B, vrould require two separate
reorganization plans. All of the provisions of Plan No. 1 would affect the FDIC; none of the provisions of Plan No. 2 would affect the
FDIC. Plan No. 2 would depend upon Plan No. 1 coming into effect first
and would be effective immediately after and only in the event that
Plan No. 1 becomes effective.
Plan No. 1
!• Transfer of functions of FDIC board of directors. - The
FDIC would be continued as a separate corporate agency of the Government,
However, the functions of the board' of directors of FDIC would be transferred to the Board of Governors of the Federal Reserve System and such
functions thereafter would be administered by the Board of Governors as
the board of directors of FDIC. The members of the Board of Governors
would not, of course, receive any additional compensation.
2. Functions transferred to Board. - All functions of FDIC
relating to insured banks with respect to (a) approval of branches,
(b) consolidations with noninsured banks, end (c) payment of interest
on deposits, would be transferred to the Board of Governors of the
Federal Reserve System. Such functions would not be exercised by the
Board of Governors merely in its capacity as the board of directors of
FDIC (as would be the case with respect to other functions of FDIC),
but would thereafter be exercised by the Board of Governors in its own
name.
3* Personnel. - All personnel of FDIC engaged in duties
principally related to the functions transferred to the Board of Governors under paragraphs 1 and 2 above would be transferred to the Board
of Governors, except that the present directors of FDIC would be excluded from such transfer and their offices would be vacated. The
Board of Governors would be authorized to utilize personnel of either
agency for the performance of functions of either agency, with an apportionment of expenses between the two agencies on an equitable basis.
4. Effective date. - This Plan would become effective on the
first day of the sixth calendar month following its transmission to
Congress by the President.
Plan No. 2
1. Abolition of Comptroller. - The Bureau of the Comptroller
of the Currency in the Department of the Treasury, the Office of the
Comptroller of the Currency, and the offices of the Deputy Comptroller
of the Currency, Assistant Deputy Comptroller of the Currency and



-8Third Deputy Comptroller of the Currency would be abolished. Under
the previously effective Plan No. 1, the functions of the hoard of
directors of FDIC would have been transferred to the Board of Governors and the existing directorships would have been vacated, so
that the abolition of the Office of the Comptroller of the Currency
would not naffectff the FDIC.
2. Functions transferred to Board. - All functions of the
Comptroller of the Currency, other than those specified in paragraphs
3 and 4 below, would be transferred to the Board of Governors of the
Federal Reserve System.
3. Transfer of other functions. - The following functions
of the Comptroller of the Currency, 7*1 th. their related personnel, would
be transferred to other agencies as follows: (a) Those with respect to
the supervision of building and loan associations in the District of
Columbia would be transferred to the National Housing Agency; (b) those
with respect to the supervision of national agricultural credit corporations would be transferred to the Farm Credit Administration;
(c) those with respect to the liquidation of national banks and District
of Columbia banks, when placed in voluntary liquidation or when receivers have been appointed, would be transferred to the FDIC; (d)
those relating to the issuance, redemption and regulation of national
bank notes and the printing, engraving, and retiring of Federal Reserve
notes would be transferred to the Secretary of the Treasury; and (e)
those relating to the removal of officers and directors of national
banks under section 30 of the Banking Act of 1935, with respect to
each Federal Reserve District, would be transferred to the Federal
Reserve Agent in such district.
4. Examinations. - The functions of the Comptroller of the
Currency with respect to (a) the examination of national banks, (b) the
assessment of expenses against national banks and their affiliates for
such examinations, and (c) the assessment of expenses of examinations
against banking institutions in the District of Columbia, would be
abolished. The Comptroller's authority to examine affiliates of
national banks and to examine banking institutions in the District
of Columbia would not be abolished but would be transferred to the
Board of Governors by virtue of paragraph 2 above.
5* Personnel. -Except as transferred by the Plan to other
agencies, all personnel, books, records and property of the Comptroller
of the Currency would be transferred to the Board. The compensation of
such personnel would be paid out of funds of the Board; and all such
personnel would be entitled to the same privileges, including retirement privileges, as are accorded to other employees of the Board in
like circumstances.




-96* Functions of Secretary of Treasury, - All functions of
the Secretary of the Treasury with respect to the supervision of the
Office of the Comptroller of the Currency and with respect to the personnel of that Office would be abolished. Functions of the Secretary
of the Treasury with respect to (a) the transaction of banking business
by member banks and the licensing of such banks and (b) the purchase by
HFC from banks of preferred stock, capital notes and debentures, and
loans by RFC on such stock or debentures would be transferred to the
Board of Governors.
''• Objectives. - The Plan would state that its purpose, along
with Plan No, 1, is to establish at one point the responsibility for
supervision of banks by the Federal Government and thereby to effect
economies in administration and to avoid duplication of effort; that
the Board of Governors is the agency utilized to accomplish this objective; and that the functions transferred or consolidated by the
Plan shall be exercised to avoid, in so far as possible, the duplication of similar functions or the performance of similar duties.
8. Effective date. - This Plan would become effective
immediately after, and only in the event that, Plan No. 1 under
this* Proposal B shall have gone into effect.

4/15/46