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I l l a l e t t e r d a t e d May 6 , 1 9 5 8 , t o M r . D i g g s , A c t i n g Compt r o l l e r o f t h e Currency from fir. A , P . G l a n n i n i , t h e l a t t e r makes comments and a s s e r t i o n s r e s p e c t i n g t h e a t t i t u d e of the n a t i o n a l bank e x aminer as r e f l e c t e d I n h i s r e p o r t o f examination o f t h e Bank o f America 8 . T . & 8 . A . made as o f August 5 1 , 1 9 5 7 , and completed on A p r i l £ 0 , 19£8. W i t h o u t a t t e a p t l n g t o prove or d i s p r o v e M r . G i a n n i n i ' s a s s e r t i o n s t h e y I n d i c a t e t h a t i n t h e mind o f t h i s prominent banker a t l e a s t , the examiner i s unduly r e s t r i c t i v e and a t t e m p t i n g t o b r i n g about ssore a g g r e s s i v e l i q u i d a t i o n under present depressed c o n d i t i o n s . Excerpts a r e as followas "Knowing t h e c o n d i t i o n o f the bank as w e l l as I do, I am c o n s t r a i n e d t o remark t h a t t h e w r i t e r o f t h e l a s t r e p o r t e i t h e r f a i l e d t o make a proper study o f c e r t a i n m a t t e r s which he has seen f i t t o c r i t i c i s e , o r he has concocted problems f o r reasons b e s t known t o h i m s e l f . He lias succeeded i n p r e s e n t i n g ® warped p i c t u r e o f t h e c o n d i t i o n o f t h e bank by t h e simple b u t e f f e c t i v e process o f over-emphasizing t h e imp o r t a n c e o f m a t t e r s having minor s i g n i f i c a n c e , making obscure t h e r e f e r e n c e t o improved o o n d i t i o n s , and e x a g g e r a t i n g p r o b lems t o t h e e x t e n t t h a t even though c e r t a i n progress has been r e p o r t e d , I t s importance i s dwarfed by the enormity o f t h e e x aggerations. • * # » " B e f o r e completion o f t h e examination t h e excess o f m a r k e t v a l u e over book v a l u e o f 0 . 8 . Government bonds h e l d by t h e bank had I n c r e a s e d t o $ 2 , 8 0 0 , 0 0 0 and as o f A p r i l 2 8 , 1 9 f 8 was 2 5 6 , 0 0 0 . Government and guaranteed issues a t t h e p r e s e n t t i m e a r e s e l l i n g on an average o f 4*97 over par v a l u e . W i t h our investment o f $ 5 7 6 , 8 9 9 , 0 0 0 c a r r i e d a t a premium o f only p o i n t s , t e do not admit ' a h i g h l y i n f l a t e d s i t u a t i o n ' ( a s charged by t h e e x a s i n e r ) . M o r e o v e r , premiums a r e amortized t o the f i r s t c a l l d a t e and t o imply a dangerous s i t u a t i o n t i t h r e s p e c t t o our I n v e s t m e n t i n 0 . S . Government bonds I s t o i m pugn t h e c r e d i t o f t h e F e d e r a l Government. F u r t h e r m o r e , i t i s i n c o n s i s t e n t f o r a F e d e r a l examiner t o r e f e r t o a l a r g e h o l d i n g I n s e c u r i t i e s o f t h e Government as I n d i c a t i n g a p o t e n t i a l l y dangerous c o n d i t i o n when t h e s a f e t y o f d e p o s i t o r s 1 funds i n p o s t a l s a v i n g s , t h e insurance o f banks by t h e F e d e r a l Deposit I n s u r a n c e C o r p o r a t i o n , and t h e o l d age b e n e f i t s o f t h e S o c i a l S e c u r i t y A c t , a r e a l l contingent upon t h e s a f e t y o f funds i n Government bonds. t t ft « "The exaggeration Xiee i n the f a c t t h a t loans aggregati n g $112,700,000 a r e r e f e r r e d t o as c o n s t i t u t i n g a major a s s e t problem, whereas on analysis the adverse c l a s s i f i c a t i o n i s found t o be $ 5 , 5 2 7 , 0 0 0 , d o u b t f u l , and $ 1 , 7 5 1 , 0 0 0 l o s s , less than 4 / 1 0 of 1$ of t o t a l a s s e t s . * * * * " f i h i l e I a t t r i b u t e c e r t a i n gross e r r o r s appearing i n e x amination r e p o r t s t o the l a c k of understanding on the p a r t of the examiner, i t has become i n c r e a s i n g l y apparent t o me t h a t t h e management of t h i s bank i s being subjected t o undue c r i t i cism, and m a l i c i o u s and slanderous harassment. S l i g h t considerat i o n i s given t o the f a c t t h a t since 1932, not only haE> the management overcome obstacles t h a t were g e n e r a l l y viewed as i n s u r mountable^ but without p r e f e r r e d stock from t h e Reconstruction Finance C o r p o r a t i o n i t has c a r r i e d the i n s t i t u t i o n forward t o a p o i n t which marks the most successful e r a i n the h i s t o r y o f the bank, and t h i s i n the f a c e o f economic conditions which i t must be admitted have not favored such an advance. • • » » *Ye are t o l d t h a t a r u l i n g has been aade by your o f f i c e t h a t r e a l e s t a t e loans c l a s s i f i e d as u n l a w f u l because of nonconformity w i l l continue t o be so c l a s s i f i e d as long as they remain i n the bank, r e g a r d l a s s of r e d u c t i o n i n amount, improvement i n s e c u r i t y v a l u e , or any other changes which should make the loans conforming. This r u l i n g appears t o us t o be f u r t h e r evidence o f the l a c k o f cooperation on the p a r t of your o f f i c e . * * • * • 1 am s t i l l h o p e f u l t h a t f a i r - m i n d e d and unbiased a u t h o r i t i e s i n i a s n i n ^ t o n w i l l s h o r t l y see t o i t t h a t proper considerat i o n i s given t o t h e a f f a i r s o f t h i s bank and proper treatment a f f o r a e d the i n s t i t u t i o n . I t has been my d e s i r e t o secure some r e l i e f from hea*y r e s p o n s i b i l i t i e s and w o r r i e s t o which I f e e l wy many years of s e r v i c e i n the economic f i e l d e n t i t l e me. Howe v e r , t h i s i s not p o s s i b l e as i t i s not my d i s p o s i t i o n t o r e l a x my e f f o r t s i n b e h a l f o f the I n s t i t u t i o n w h i l e an u n f r i e n d l y a t titude exists i n tashington."
