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£££X April 12, 194& Honorable Broat Spence, Chairaan, Committee cm Banking and Currency, House of Representatives, Washington, D* G. Bear Mr* Chairmant This is in response to the request contained in the letter tram the Cleric of your Coaslttee dated March U f 194&, for 11 report on the M i l B* R* 5630, introduced Igr Mr, Beys, *$e aaead sectio© $155 of the Revised Statutes, with respect to the eatablisbaeat of branches by national banking associations** In & letter dated September 27, 1944, the Bo&rd advised your Committee that it was favorable to the enaetaaat of legislation along the lines of the billfi.R. introduced by Mr*flaysin the last Congress, the objectives of i&lch are similer to the present bill M* R« 5630. The Board continues to hold the saae views as expressed in that letter and hopes that branch hanking legislation of this kind aay be enacted by the Congress* For your convenient reference a copy of the Boardfs letter with respect tofi*B* 5256 is enclosed herewith* The present bill,fi*R* 5630, differs froMfi*R* 5256# which was the subject of the Board** letter of September 27, 1944* In that it requires a minimal capital of $200,000 for the establishment of out-of~ tovn branches by national banks, and therefore also for the establishment of out-of-town branches by State member banks of the Federal Reserve System, and in addition it retains certain other somewhat restrictive provisions of the present lav* Under existing lav, national banks say be organized in aaaller coassunities with a capital less than #100,000 and State banks aay become members of the Federal Reserve Systea with a capital less than $100,000 in siailar circumstances* There are a number of States wruch pemit banks to establish branches with a capital of less than #100,000, and there aay be instances where the establishment of branches with such lesser capital by State aeaber banks of the Federal Reserve Systsa would be sound and should be permitted* Therefore the minimus capital requirement of $100,000 contained infi*R«5630 may well serve to prevent some State banks with out-of-town branches from bee®** ing members of the Federal Reserve ays teat or existing State member banks froa establishing such out-of-town branches when it would be sotmd and proper for thea to do so* Accordingly, the Board feels that the enactment of the provisions contained in the bill H»R* 5258 of the last Congress and which are now contained in the iill H*R. 726, introduced by Mr* Bays in this Congress and now pending before your Cosaitteo, would be preferable to the enactment of £U R* 5630* Honorable Brent Spence 2 There is another point in this connection to which n* wish to refer. The Comptroller of the Currency, vith respect to national banks, and the Federal Deposit Insurance Corporation, with respect to m n m m b e t insured banks, oust give approval for the establishment of branches bp such banks, whether such branches are located within or beyond the limits of the city in which the parent bank is situated* The Board of Governors oust give approval for the establishment of out-of-town branches of Stats member banks but such approval is not required in the case of branches established within the city in which the parent bank is located* For the same reasons that existing law requires the approval of the Comptroller of the Curreacy and the Federal Deposit Insurance Corporation with respeot to intra-eity branches of national and nonmember insured banks, the Board feels that the establishment of intracity branches by State member banks should likewise require the Board's prior approval* Accordingly* in order to accomplish this, it is suggested that an additional provision be included in the bill so as to aasod the last sentence of the second paragraph of section 9 of the Federal Reserve Act (IUS.C. Title 12* section 321) bgr insorting after the oomws following the words "February 25» 1927* the words •either within or** Very truly yours, (Signed) Marriner S. Eccles II* S* Eccles, Chairman.
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