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April 2, 1935, Mr* H* J* Grant, President, Zionfs Savings Bank and Trust Company, cialt U k t City, Utah. D«ar President Grantt This will acknowledge your letter of March 50, in which you enclose i typewritten memorandum containing suggested aenriaents to The Banking Bill of 13:~>5, together with arguments to support such en amendment. I wa mindful of the desire on the part of the stock savings banks of the country for legislation similar to that suggested, as numerous re< uests have been made in that direction, both by correspondence and by >ersonal conference in «y office. It is true* that existing lew grants to mutual savin.: s banks and to Morris-Plan banka severni exemptions from the regulations of the Federal Deposit Insurance Corporation *hich do not seen either just or logical. In a frenerul -*ay, all institutions which Invite savings or thrift accounts compete for their business and so far as is practicable in the field of regulation, it would seem that they should all be subject to the s*irae restrictions in order tait their cuapetition M y be fair. I c&n, thereforv, a^ree that the mutual savini'3 brake in fairness should not enjoy the benefits of deposit insurance along rith azock savings beiiks and yet be >enaitted to pay a higher rate of interest on the Tuucis which they invite fross the public. Nor should t'ley be >enaitted to receive interest on their own balances carfied rith banks while the stock 3avings bankE ere pr«JaiM.ted l^oa doin/ G O . Sly agreement with the above proposition, however, does not lead ae to the same conclusion in s«' klm* solution or an adjustment. To extend to stock *-.; vin^s banks the exemptions now unfairly extended to the mutual saviu :; banks would only r -vate instead of alleviate the trouble* ><xor the MOM argument against grF.ntin m special status to the autur.ls is certainly even -'sore ul vfara led to the comp^uitive situation if Mr* H. J« Grant, President • 2* stock savings banks and the commercial banks of the country, both members and nonmeobers of the Federal Reaerve Systeo. Tber^ is approximately $10f000f000|000 of time funds in the commercial banks aa against approximately ^l,500f000,000 in the atock savin ; banka* In iaost caaes the stock savings banks are located in communities where commercial banktj likewise do a savings business* If the strictly savings bank3 should be able to pay a higher r*t* of interest on their aavings accounts than the commercial baakl and should likewise be :>eraitted to receive inters t on daily balances maintained with other banka while the commercial banks in the same commandty were prohibited from so doing, it would, in ay o inion, constitute extremely unfair competition and could only result in the gradual displacement of the savings deposits from the commercial banks to the strictly savings hanks* Ify own reaction to the unfavora le situation existing under present legislation is that the mutual savings banks should not enjoy the preferential treatment they now receive and they should be subjected to the uame restrictions as tire other ^eahors of the Federal Deposit Insurance Corporation or should not be granted members hip therein. In fact, they seuo to resemble aore closely in structure and operation the building and loan or savings and loan institutions and could properly be made eligible for member a hi/> in the Federal oavings and Loan Insurance Corporation* Thia particular ueation is not th© especial concern of the Federal Reserve Pioard, hemevor, but of the Federal Deposit Insurance Corporation, which has sponsored Title I of The Banking Bill of 1335* I have had occasion, however, to discuss this matter only recently with Mr* Leo Crowley, Chairman of the Federal Deposit Insurance Corporation, and find that he shares ay view a*$ regards exemptini the stock savings banks from the regulations of the Feder 1 Deposit Insurance Corporation* In the same sail that brought your letter I received one of similar im>ort from Willard R* Smith of the Zion's ^avinc3 Bank and Trust Coawaiiy, v/-iich also e closed the same iaeEJorandum enclosed in your letter, together with ft cojiy of H* R* 5357 ^rith the suggested aiaendiaents shown in the text* I am sending: him a co.jy of this letter* • l t h best wislies, I BM Tours sincerely, M* 0« Lcclea, Governor* c
@FedFRASER