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(Clay*"*!! r e - w r i t e o f Drei«Lbis draft) DRAFT OF SUGGESTED LETTER TO MR. A. P. GIANNINI T h i s w i l l have r e f e r e n c e t o your l e t t e r o f August 17 t o Chairman E c c l e s , w h i c h was acknowledged i n h i s absence. This r e p l y has been delayed u n t i l o p p o r t u n i t y was a f f o r d e d f o r a d i s c u s s i o n o f t h e m a t t e r by t h e Members o f t h e Board and t h o s e o f i t s s t a f f concerned. primarily Meanwhile, t h e Board has been p r e o c c u p i e d w i t h p r e s s i n g problems concerned w i t h T r e a s u r y f i n a n c i n g and o t h e r phases o f i t s work c l o s e l y r e l a t e d t o t h e war e f f o r t . I n y o u r l e t t e r you speak f o r b o t h Transamerica C o r p o r a t i o n and Bank o f America N. T. & S. A. W h i l e you d w e l l a t some l e n g t h upon v a r i o u s aspects o f t h e f i n a n c i a l c o n d i t i o n o f Transamerica C o r p o r a t i o n and Bank o f America N. T. & S. A . , y o u r c h i e f burden i s t h e charge t h a t I n i t s l e t t e r o f F e b r u a r y 1 4 , 1942, addressed t o t h e Transamerica C o r p o r a t i o n , t h e Board t a k e s t h e p o s i t i o n t h a t , r e g a r d l e s s o f i t s merits, an a p p l i c a t i o n f r o m any i n s t i t u t i o n I n t h e Transamerica g r o u p , o r in any way connected w i t h i t , would r e c e i v e an adverse r u l i n g f r o m t h e Board. A f a i r and c a r e f u l r e a d i n g o f t h e p e r t i n e n t p o r t i o n o f t h e Board 1 s l e t t e r r e f e r r e d t o makes i t its apparent t h a t you have m i s s t a t e d position. The Board f l a t l y d i s a g r e e s w i t h a l l o f t h e broad c o n c l u s i o n s o f y o u r l e t t e r and w i t h a l a r g e p o r t i o n o f t h e d e t a i l . It cannot agree t h a t Transamerica C o r p o r a t i o n o r Bank o f America i s b e i n g accorded d i f f e r e n t t r e a t m e n t t h a n t h a t w h i c h would be accorded any o t h e r in- s t i t u t i o n s i m i l a r l y s i t u a t e d , o r t h a t e i t h e r i s berlng d i s c r i m i n a t e d -2- against. On t h e c o n t r a r y , t h e Board b e l i e v e s t h a t i t and t h e o t h e r F e d e r a l b a n k i n g agencies have a t numerous t i m e s e x e r c i s e d u n u s u a l p a t i e n c e i n t h e i r d e a l i n g s w i t h t h e management o f t h e s e institutions* Time and a g a i n a t t e n t i o n has been c a l l e d t o t h e unsound c h a r a c t e r o f proposed expansion t h r o u g h t h e a b s o r p t i o n o f e x i s t i n g banks o r t h e e s t a b l i s h m e n t o f de novo b r a n c h e s ^ w i t h o u t a c o r r e s p o n d i n g i n c r e a s e i n capital structure. Time and a g a i n a t t e n t i o n has been c a l l e d t o u n s a t i s f a c t o r y s i t u a t i o n s i n t h e Bank o f America r e s u l t i n g from t h e p o l i c i e s and p r a c t i c e s o f t h e management d u r i n g i t s r a p i d expansion program. These same F e d e r a l agencies have been g r e a t l y concerned w i t h and h i n d e r e d by t h e complex c o r p o r a t e s t r u c t u r e o f t h e T r a n s america group and t h e u n s a t i s f a c t o r y manner i n which funds t o expand and c a r r y o u t o t h e r a c t i v i t i e s have been o b t a i n e d by f i n a n c i n g w i t h i n the group. As you knoyj, Members o f t h e Board have on s e v e r a l occasions t r i e d t o reach i n f o r m a l u n d e r s t a n d i n g s w i t h r e s p e c t t o t h e expansion p o l i c y o f t h e s e two i n s t i t u t i o n s b u t t h e e f f e c t i v e n e s s o f t h e s e i n t h e l i g h t o f e x p e r i e n c e , seems d o u b t f u l , t o say t h e l e a s t . efforts, We r e f e r t o t h e e v e n t s which t o o k p l a c e i n c o n n e c t i o n w i t h a c q u i s i t i o n s o f t e r e s t i n t h e Temple C i t y N a t i o n a l Bank, t h e Peoples in- Bank o f L a k e - wood V i l l a g e , and t h e F i r s t T r u s t and Savings Bank o f Pasadena. I n c o n c l u s i o n , t h e Board i s n o t s a t i s f i e d w i t h t h e financial p o l i c y pursued by t h e s e i n s t i t u t i o n s i n t h e i r e f f o r t s f u r t h e r t o expand their facilities. I n c o n s i d e r i n g p a s t a p p l i c a t i o n s , t h e Board has been g u i d e d by t h e p u b l i c i n t e r e s t i n v o l v e d and i t w i l l c o n t i n u e t o be so -3- guided. U n t i l I t i s s a t i s f i e d t h a t t h e p u b l i c i n t e r e s t w i l l be served t h e r e b y and t h a t t h e c o n d i t i o n and p o l i c i e s o f t h e a p p l i c a n t w a r r a n t i t s b e i n g g r a n t e d t h e p r i v i l e g e asked f o r , t h e Board, in accordance w i t h t h e statement i n i t s l e t t e r o f F e b r u a r y 1 4 , 1942, n o t approve a p p l i c a t i o n s f o r t h e a c q u i s i t i o n d i r e c t l y o r indirectly o f any a d d i t i o n a l b a n k i n g o f f i c e s o r any s u b s t a n t i a l i n t e r e s t therein by Transaoierica C o r p o r a t i o n , Bank o f America N. T- & S* A . , o r any o t h e r u n i t o f t h e Transamerica g r o u p . Very t r u l y yours, will
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