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c o p y BANK OF AMERICA San F r a n c i s c o , C a l i f o r n i a L» M. G i a n n i n i President Mafch 7 , 1959 Honorable P r e s t o n Delano C o m p t r o l l e r o f t h e Currency T r e a s u r y Department Washington, D. My dear Mr* Comptroller: Your l e t t e r o f F e b r u a r y 20, 1959, a r r i v e d when I was i n t h e E a s t , and reached me subsequent t o our l a s t c o n f e r e n c e i n Washi n g t o n on t h e morning o f F e b r u a r y 2 5 , 1959, a t w h i c h t i m e we d i s c u s s e d and agreed upon t h e p r o c e d u r e t o be f o l l o w e d i n t h e m a t t e r o f i n c r e a s i n g our c a p i t a l • On t h e b a s i s o f t h i s u n d e r s t a n d i n g and o f a m u t u a l observance i n good f a i t h o f t h e p r o v i s i o n s o f t h e memorandum o f December 15, 1938, y o u can c o n s i d e r t h a t our Board o f D i r e c t o r s and t h e Management o f t h e Bank a r e committed t o proceed w i t h a program t o i n c r e a s e t h e c a p i t a l s t r u c t u r e o f t h e Bank t o t h e D e p a r t m e n t s s p e c i f i e d r a t i o n o t l a t e r t h a n June 50, 1959, t h e amount o f a d d i t i o n a l c a p i t a l , as agreed w i t h y o u , t o be a r r i v e d a t a f t e r we have had a n o p p o r t u n i t y t o d i s c u s s w i t h y u u i n d e t a i l t h e f i n d i n g s o f y o u r examiners w i t h r e g a r d t o t h e a c t u a l a s s e t v a l u e o f t h e Bank, and i t e m s t h a t were l e f t f o r f u r t h e r d i s c u s s i o n i n t h e memorandum• May I be p e r m i t t e d t o c ^ l l t o y o u r a t t e n t i o n , f o r t h e purpose of c l a r i f y i n g the s i t u a t i o n , the f a c t t h a t your l e t t e r r e f e r s t o the memorandum as m i n e , whereas i n f a c t i t was n o t o f my a u t h o r s h i p b u t was p r e p a r e d i n t h e T r e a s u r y Department a f t e r t h e conferences t o which y o u r l e t t e r r e f e r s . I t does n o t r e p r e s e n t our v i e w s , o p i n i o n s , o r c o n c l u s i o n s , b u t was accepted by us on t h e b a s i s o f our c o n f i d e n c e i n t h e assurances o f t h e conferees t h a t f a i r t r e a t m e n t w o u l d be accorded t h e Bank, and i n ttoe i n t e r e s t o f a r r i v i n g a t an a m i c a b l e adjustment o f d i f f e r e n c e s . It was e x p r e s s i v e o f our d e s i r e t o go more t h a n h a l f way i n an endeavor t o c o o p e r a t e w i t h t h e T r e a s u r y Department. Our p o s i t i o n w i t h r e s p e c t t o t h i s and o t h e r i s s u e s r a i s e d was c l e a r l y s e t f o r t h i n our l e t t e r s o f September I S and October 1 1 , 1958. I t i s d i f f i c u l t f o r me t o understand ho?; i t can be c o n s t r u e d t h a t the a r b i t r a r y p r o v i s i o n s o f t h e memorandum express i n any way o u r p o s i t i o n w i t h r e g a r d t o c a p i t a l s t r u c t u r e , p a r t i c u l a r l y when, as was p o i n t e d o u t i n t h e above mentioned communications, o u r i n s t i t u t i o n i s p r e s e n t l y o v e r c a p i t a l i z e d by more t h a n 100% under e x i s t i n g l a w s . - 2 S i n c e 1932 when t h e Bank came under t h i s Management, i t s d e p o s i t s have been i n c r e a s e d f r o m l e s s t h a n #700,000,000 t o a p p r o x i m a t e l y | 1 , 4 0 0 , 0 0 0 , 0 0 0 and i t s e a r n i n g s have been so g r e a t l y i n creased, and i t s expenses so reduced, t h a t an improvement o f more t h a n $ 6 9 , 0 0 0 , 0 0 0 was made i n i t s n e t sound c a p i t a l s t r u c t u r e by t h e end o f 1938. I f f u r t h e r evidence be r e q u i r e d t o demonstrate t h e soundness o f our p o l i c i e s and t h e e f f i c i e n c y o f our Management, we p o i n t w i t h s a t i s f a c t i o n t o t h e remarkable r e s i s t a n c e o f t h e Bank t o damaging e f f e c t s as a r e s u l t o f t h e u n w a r r a n t e d and u n f a i r a t t a c k s : made upon i t and i t s Management, t h e B a n k ' s business h a v i n g remained a t n o r m a l l e v e l s and i t s e a r n i n g s h a v i n g i n c r e a s e d Our Board o f D i r e c t o r s has a t two c o n s e c u t i v e meetings d i s cussed t h e m a t t e r o f t h e D e p a r t m e n t ' s r e q u i r e m e n t o f i n c r e a s e d c a p i t a l s t r u c t u r e , w h i c h , as I s t a t e d t o y o u , i s e x t r a l e g a l , and appears i n e q u i t a b l e and a r b i t r a r y because i t i s n o t a p p l i e d t o a l l b a n k s . N e v e r t h e l e s s , on t h e b a s i s o f t h e memorandum and our u n d e r s t a n d i n g w i t h r e g a r d t o t h e procedure t o be f o l l o w e d , a r r i v e d a t i n our conference o f F e b r u a r y 25, 1 9 3 9 , t h e Board o f D i r e c t o r s a t t h e m e e t i n g on March 14 i n t e n d s t o t a k e d e f i n i t e a c t i o n t o p r o pose a f t e r conference by t h e Management w i t h y o u t h e f i n a l p l a n t o be s u b m i t t e d t o our s t o c k h o l d e r s and i n f o r m i n g them o f t h e a d d i t i o n a l c a p i t a l t o be s u b s c r i b e d . My k i n d r e g a r d s t o y o u . Yours v e r y truly, L . M. G i a n n i n i President /s/
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