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May S
Toi Mr* Chaso
Front *«ft
SIMI
Subjeoti
i-reposed substitute for ~.eo«
t i e s 528 of the Banking /©t of 1936.
I t i s r««o':iffiend04 that coneid*r&tior. ,e givoia t o tho exception
of ixitorlooki&g sorrloos of dirootors of Mutual $«risgs Bask* in tho
provisions of tho proposed outootituto for iieetloa 828 of tho
Aot of
auch oorTieo ha» booJt and is oonsldored honorary und
nltruittic. The xutual bojikt are non-profit lustltu*
tion* operatod in tho intorost of depositore and ar©,
1 B «8s»no«, a public trust*
t*
Tho dlrootoratoi of ma-ual saYlsgs banks trt rooruitod
largoly from tho dirootoratos Of othor looal banks*
Suoh sorTioo has b A oxooptod from tho prorisioss of
tho Claytoa ^ot and Its inclusion at ^ o proso&t time
would Oftooo a tremondou* upheaval - probably dotrlmoatal to tho mutual banks*
3*
Hhether suoh servlco would b® exompt unaor tho pro*
pos«d> law boosuso of tho dlfforonoo is tho olassos
of bus las ss QO&duotod by tho banks would dopood upon
tho definition of c .aapetition* Most nattoiml aad
stato banks a&d trust oonpamios operat• savings do*
partmonts* mako loans on r*al o stato and porohaeo is•ootmomt securities* All theso uotirities aro In*
hero&t in tho oporation of mutual sftvic * baizes*
Othor ©lasses of local basks ha-fo not oonsidorod
thomsolTos as oompotltors of tho mutual basks is a
eunber of conausltlo 9 If sot all* Tho mutuals
ha-ro paid a highor rato of isterost on doposlta as
a rule aad tho othor banks havo mado no effort to
moot tho rate.
Za
Mw/aorfJiidun to the Boards
jf Kx&sin&tions.
Bet
Proposed Substitute far
Section SE8 of the Banking
Aft of
I s aade to til© pfojjosed substitute? for Seeticm M of
B&n&Lag Act of 1935, relative to lntorloekin^ relationships of
officers said a*plogr«#& Tilth aore th&B on* banking institution, ishiafe
*J submitted to Urn Bi^lslaa of ib&e&n&tions
1956* section 25 of
«rut the la»t peragrftph of such ©eotioai; the paragraph of
25(a) of tlie y«d«ral Bes^rrt® Act, t i snendtd, «fblctx caavlth Hie i««r<is *A suij©rl% of -the stare* of the oaplt&l
f aay aai^b oorpors-tlan* If s.mm&®& 'by s ^ l k l i ^ out a l l
of said pafagr&ili. ®te©pt the f i r s t a^mt^ios thereof; and the
JU*t entitled *Mn Act to mpplmm&t eodsting k w agals^t
im~
lawfal restraints and msaopoiiea, eusd for otls«sr purpoaes11 ( ^
Stat* T30) * cpfxroved Ooto^r IB, 1914, aa asfigodsd, 1© further
a^afidt^ (A) ly stxikLng out aoettda ftk thereof and (b)
3tLtatLng for the f i r s t t*irs@ p^rmgra^j© of geetlon S
8* So dirdtttor^ officer* or1 an^loy** of «ny
btak of i$j© F®deer&X R®fs«s*« Sferfftfla or &*t^ bns&ds. thereof
be at the saiae t l a e a prifiate ba^lc^8 or a diroetor^
ofHoar, or mgloym of any otfeor 'bauk, bcsaklsig osaoeiatlon^
asvinga hmk$ or trust ®Qi8£?«3r orgaiais^d isuifer tl» ieticm©!
Bank Act or organised under th# laam of any Stet® or of th«
P Gol&tmbla, or sa^r isErejMsli -tharsof * except
tha foSJLoiflxui: ©r «ay feaaaah thareof s
i
///
"(l) I b$nk* bartidj% assod-vtlon, savings bank, or
ooiBp&ay, iac*ro than 90 p®r ctarit of tho stock of
dlroetlgr m* lndir<*otlgr by the lfedt©d M«ta« or
of #iich the t i l t e d States dlr^^tly or
than 90 per cant of the stock*
*{3)
/ i
It
k talk, baakiag association, es.-vings bank or t r u s t
been pX&oad fornelibr in liwiidatlon or
I s l a th© hand* of a tiaeeiveis oonseryator or o-t^ar o f f l d e l
@xss*ds3Ui^ siisHscr
"(4) I corporation prisiotp&XXj eng&ged in i n t s r n * t l M A
or foreign %ankl&g or baakl&g in a dopendoaoy or insular possession of tfce United 3tet©s «bloh has entered i&to an agreeasBt
with the Fedsr&l $& serves Beerd ^H.U'imat t o aeetton 88 of the
*(5) I teztkf btsnklag offsoctlation, saTings bta^k, or trust
eoiqigny, ^sre tb&n 50 mr ®m* of the ffeMll of ^ t l i i
m^
ctlrsefsi^r mr lodlre»otly b j psraoos A i ^'^s dlreetly
imrm H M 60 pep o«nt of MM ilMl; of M4I ^b
^
*(6)
A bankj bstnkla^ assodUtiasi, ssvlBg^ benki, <»• trust
Xoeactsd and b?>vlBfi JB© teasdfe i n tha sta»i9 city^
vHX&gs ao that in nAddn inic& oecfilber tail orfctsayfcftMll
l a IaQd^d f ox in itij c i V / ^>--'-> '^ ^i'il^fe ooatigtwus thereto.
f
aot aig&ged i s a «X&so or el&»ses of tednets In
t
t h i s proposed subatttut^ m ^ hiwre
U?OB
p
lodkina hmk Nto%l4BSMpS>f the Blxdalon of
IMS rorfiUwsd ft large auml^^r oi o»;t»iVa^lckj: Clr^ftoK l i t
mru
lltid e^rtr^da lnforsKj.tloti s=^hioh I t l i lHps4 Mf be Sjf HSJ
Dii5triefc&^ Tim hr.s nat ^raiitted an aeeq^iatk^ and propsr
the i&&xrm&tlQ» obfci ined nor hM i t pMM&tM
to fonsulat© wnd sapireaa at this tlz»» sny d#fiixit#
^
A bank, banking association, savings bank,
or trust company of which such person is lawfully a
director, officer or ©taployee on the elate of the enactmmt of the Banking Act of 1935s ProyiftecU hoover.
That this exception shall not apply to any pergon who
1*
/7f #40 ''',.• ;' Zt
serving under a permit
A
of the Federal Reserve Board
which is specifictilly limited as to its duration*
In the properstlon of the inforastion futmittad herewith only current
Clayton Act fHa# with respect to which the effectiveness i f ISN outstand*
lag permits h&& been ascertained recently have beau consul ted <> GfitiersHj
dpe&ktugv the files on permits Issued piria? 'to about iX&ao&ry |g UMg were
not sa&gulted j tills f«&ot (Should be borne in adnd sinee i t I s possible tha.t
s t l t u t e i s MMiiii In1^ lav* Vixvttoert the ^Cfesas Involving
Which Kay Hot B@ Dlsturbid* t.n indle&tdci in ths C08q>il&ti3nt laaliicie also
if €»9%B which m$f involve "contlguoust territcafgr1' but the
was not mfeirel^ csl^r an this paint*
Xt should b*» hmmm In mimi ti*ot i'he prfisest l«w appll
k or s bank orgaJBised ®nd operfttijig und^r tlie X»w^ of
United &tstes and any other hmk nakin^; laaaa ^R ato<^ or bond
the propose*.! iKroviaiofi will incSjode wirvioss to a l§!bg£ bank and
with respect to @«eh dla!arlat ?i3^ based ??as distributed
ir of exsnlngrs £tndr slnoe th@ dastaraiafttlcm of r'e<sspetittve
ami #«fu&lifleu&lcm3H i s quite ©ft«a a matter af opinloii, aiiuor
hnv® resultad cmd due Bllovranea ghcmld be laede* far B ree.ftoaftblo member
fcMtaAy in VlM t f th© liatitod tiae £V«.i!Uble for th# studar*
Uts stetistic© £\irniahad ?xe beli^^^i to be gubg^istisllj ©orrset
Mi to reflect g®ri#relly the relative effect oif Urn proposec! mxbstitut® upon
fies&$ti»g and autliorlasKi- interlocking ral&tioasldp® wkleb
d Ifet basis for this
legisl&tiem upon those eases which have Wan definitely and finalBo&s*ci within the p&r»t
ly
'ill Mil
0Mtt Involving Relation*
Oases
Bg Disturbed
ill
s Involving
WldA App&r«ntl
BO PraidMted
554
Hdserve District No, 1*
Helatioo-
Hsgr Hot
ships Which
xoe
the UM indi-vldufils 1B the 3F±rst Federal
Bistrict
• part of tiiie s
hm prohibited ferf the onaotsui»t of th« pro.posmi^ SO
© 0i* th» inetitttlliM involved for five | M N M lMfHP«
Q^
of H of those iMi.vi(iu&ls do aot appear to be gubjeet to psrtiCMlsr
\mile Ihi ett«Bd&ne$ »t dlx<9etor6( ssatJiigs of isiae w«.s C5riticis^.j, MM loans
to MMPM MM subjected to oriticisa end the loan*; to the interests of SM
9 of" MM 10S o&tses tua ksAf involved are M i located, in
has been. Wit tf th© ooaip^titiTe etiitUB of
banks inTolv«d in. the 103 afts«»a ixtfoiving rols-tianships which appar«aitly
b® jprrohlbited "by the etMtctaent of t h i s provision}
(ft) NMf oinpe titles* for eoRBierftiei bugtoet* tod
aornel eton^etitlor* for sattl&gf bufEinoes
?1 •
coatpetliion for commercial end
7
(c) HUMNf cwagpfttitisio for
g
(f) Minor 4MMspotKitioct for
(h) Mirier oosipt?.titian £or aom^sr
comrmti.tlan for tarugt
8
ccwp#tition for ttOBKerci&l &nd named
(k) Uinor e<»sipetitigD fox* eoRcaerol«l and tvu»t business
(l) i i oa^dtition
s* Morris Plan
£
103
I
Xavolvi&g Rel&tio&"ships Uhloh May Hot
total OliM
| U
Cases Involving
afelps 1Vhi«h I
mil Ba
Of the 60 o&««g forming & ••>as*i oi" this atudgr and jbavolvi&g relation
ships whldk apparently MHflUl fce prohiblt?sd | y ih® priftMi mibsti^tfi^
tSiTtjie i:?wol%% prdbrate iHlHrVi i^arther infarteaticHi eono^ming #itck has
not been «apif.iH®d a t tide ^IBO* Portp-f^ifcr^ af the rettainitig S? inter«»
nvblpa iuvoSLvisdl IMIM boaa ! • axlst«a<i« for fi1*© jeers or
Xrj IS of tho 57 oagies^ the breaks iarvabrsd mm not jdtu&t©d in tha
oaaaunlt^f* Xc 4? of the ea®«is, the quaUUlfintloft* of the
Involved da riot appesir tc» be siubjeet t o partleul&r quest!on j
of th© m^e® inforsa^tloo with rospoet to qufiliflQtEitloQs was not
T i l ? M ^ l a '^su files
• W ap artmtlj subjoet to !^o©
The earapctltiTO at?it»i0 of -th& htxak® involved ir* the S? e^aaea
not inolude tliose inrvoXviag parlvxite baafers) involvin
y
4 be prohibltod has bom ^nolyaeS as follovst
(a)
Mln®r esota]>otitlon
(b)
Aeate oompetltlon for botii
t
(c)
Minor oo©p©t4tioii for botb ©o»s«reial and
andtton^mal<sosi:.^tltioKt fos* trust
coaptitltion for oaHaorci&l baslsesa Mai
for trust
(•)
H a n oos^etltlon for e^ffiKM^roi&X tm«i»##a anl nomal
hi,
(f)
Sorssal eoap&tltiaa Car
(g)
(h) Hanasl ooo^etitioB for oowwrciol Ifli trust
(i)
Minor oo^wtlUan tar ccwnarelal aad saving*
10
(|)
Bormrsl tos ^titlon for >-
(k) lltiior o»iiv>stitles i'ar oowaeroifil and trust
and rionaal fX&r^iiilon for ^&irimt l^slxs^ssa
(I)
Minor coBspetit/loo f<tf sowwrei&ls «Kidn'.{fl and t r u s t
(m)
Sarakil 00%^'titloc fmr oofm&raLnl and t r u s t bu&inoifi
(a)
Aoutd iocjpetitior
-•;• •-^rci^-JL> ;s- "i
X
.^nd 'taruust
1
(o)
Acute oaapffttttoci • ->r oaaaerdtil
• In twelve of thMN oases Eorrls
5* Federr*! Ttex&rwk D i s t r i c t So* I*
Total 0-:,;;^.:3
ships Ifhieli Ik-.;~ Pot
188
Ui
01 HM II i^'ivi«iuu.r in ^
IK^P©
sliipa Whleh
bi
i part of t
kteivd B#aerte District ahoe®
!
id iliorio reX^ti<»ishipi H j H i f i l i j
Iso prohibited by MM IHMlNKl *t &'-•.
•
-
trf*t 44 ;
two c»r ^^r® of the; iKg;Vi.tn.ti!33nsJ ir*To>l^ •
.
or
of H of thosvc; im'ii^iciUiiXi ^b not «tp-p©ffi3P to b®
U
M3U inforatatloci rei:-.tl^o
- of tlis i a d l v i i ^ X i was not
In 3 of tfee e^w:^ th<? h r;ks invoLvvd are not located in
the »«^e business oaiasasiity*
HM folla^inr* m d ^ l i iMti btKsn LSS
« t i t H l ttttua of the
mml^^d in the S$ o&MKtn UxmLTisu^ i*el»ti'9^altf9t ^shiei
^3 t:?rohibiteci ^r fc. •
(f-) ISincc." ^--:. r^tItaan
HMH| I
or
.
(b) lormal eoeti3eti.tian far bot
. .^ently
fnpMMi NfcftitKlM
•
1
K?rcial
•
ine&s
(o) Barmen oon^ietitiaa f&r @4HMVVML« MMtagi
(a) Minor caspfctttloii fof MHMMlal and MNlil
Blnar oocincitltlon for trust busino^s
(f) UjMV oo2tp^tltl<m
sacrciali s&^in ;s and trust
far cjass&srsi
•- s^rm&i
M M H U M
trust
(B) Minor e®si>^tltio!i i*ar eoam^rainl ;;xjcf MWin^s &^ noreal
.on for teturt U
(J)
0MO»
in^olTing a ftatrris Plan
Bo* 4
rlsA, QlMf
afaips Which Appmtttlgr
. ^ ^ 1 , .jE|gi^riL^tojbad _ .
Cases Involving
ships Watch Apparently
M a i d .Ba. ..Prohibited
1ST
4?
194
or ©are*
In XT of UMI i f z^
tfa«E s^ra® UJ iv;, is ooasaBsity«
ItaMNOL^e^©r© not
fho quailii^(;tiona of 40 i f tbe
I pMV .v bt Mitcil to l^l'ltdliiJ
tnvouLvod and iafona&tlcic w?^e not avail&bies concarsing
The oor ;>: ctltlvv itMttf t
IMMIM
f
involved in the 4? G&SCS
(a) SorgKil coopstitlon i a r bath c<3MMMlal IBtf
(b) lalnor | •
(a) Acute •
tticffi Tor CMMMHT-:".
nd jiorisai oospetltdLoB for
t i t l a n i."or bath fiso«swxrclaL and «3&vlaij«
(f) Uxnor MnpotlttM 0MP I M H N l l l | iMtffli
(
trust business
and
ii far trust ItfsteMt
(h) iillaor coc^jtititm for cm^lffgi ctklj
(i) stavA swp«MMssl ftsr MMsirttlal^ ^crdua-s and tr?..
hisinewi
S
£
v^
10
District Ko»
Csees Involving
skip© 3hieh
Xnv&Lilng Rf&*tAlft»
ships WkLeh Majr £3$t
loud.
1?4
76
38
Of tbg I I ifi)3iTiaiu&I« in MMI MfHi i i t a l h l
heve b©^i «s4© I pert i f this etud^- siki vho»d r^lati<msbip-s
or M l of
of the propossXf S
tor ffbve :f^ar?> or mare,
of
qualifiertiarta of 7
de &ai &p;p®sr to b«
d f t H / find erne sp
to
wag r*gard«i if Mfl
for th« condition of «m© ox* wtxr® of the banks
In | of the 76 CCLS^SS the bfmks invaliwid &r€i not laeetfd In the same
So-caUod *ISM1US t r i a l
invalvod. i s S
snd Morris Plsn
ware isfolT@d lii 5
fhe foliawiiig analysis Ms
of the ooap«»titiv« ntatu^ of fe
iiivol¥sd In tlie 76
lie, ^rohibitctd bj
(a) Nonsel eoapetitioct for
(b) Minor Gostpetitiogi for ooaKoorclal
10
(e) Nocrs&l ooorp«itltioti fca^ junrisi^r-i b
(d) ^«ite o«Bp«titlan for (urrings
I
(e) Klnor oaatpetition. far sftVings
25
{£) Nomal eoK^titioKi for "bot
end
17
• 11
(g) S$r»I ooBtpatlttoR for M l s&irtiigs and trust
• In thdSti tMMf
o»f th* w®a ktod af loans 4
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7« FadersX Kaservo District Mo* 7.
Involving
ships Wblofc
C&sas Involving
uhlps Ihiah Key
CASSS
Of the 66 individuals in ih«* Sevonth
b<Km ssd« s pert of this stnd^' an
Dlttrlot whose
boa« r<
be prohibited by the anaetK«nt of th^ proposed
^ SI hMfi
dr more of tte instltatlonft involved for- five
enr ^MMi The
appear ta be object to ssnmre
individu&Xa wag not raftdily
involved were not loaated in the
24 of Um 66 eas«ia# the
baaiaooe Goaaunlt? whll© In 5 of
two out of three* inatltatlons
1B ®aoh $£©*> w^re ^> located*
in HlM 66 eftfiem h
(».) Aeutd ooi^>#tltlori for
sad trust
(b) &&its
competition far c?t3i®ierolal »nd SSTIAge M H M
( c ) A«it®
eonpetltlon for mvings businass
(ct) Hogm&l o o s i p e t i t i o n f o r ocKa&Mjrei£(X#
fcMftMM
savingIII
sal trust
£e) fa«aal ooB^mtltlim for oanoaereieX sad satIngs bwain©gg
( f ) KenEmsX
ooKp«tition for ssvlngs sm trust batowe
(g) N«poal C0mj>dti.tlon tor s&vingg business
(h) Soarael
oonpetltion for eonii6rcd.sX buslne*
oomt>etition for savings business
I
-14-
(i) Minor aampetitioQ. for ocaaBterciel, Mlftfii • • !
ttmat business
(j) Minor eoo^eUtioss for ©9S*aersi&l and
(k) ilnar ooo^stltlon for t^»ser€!i.al basins**
(1) Minor isamp^titiori for savinec bu,®;Uie^.g
1
JJ[,
66
- II District H©« 8#
Hot
100
9
Of iUs niae izkdiTiclu&ls In th« ^Lghtfc Fa
Hosurve Biateict
-aad,e a pert of this vtudgr iod
t^i by tn@ enaotiBaat of isha proposal* four
cl taro or
af HM liietiiiULtlacis terolTed for tXrv- jresrs or
these mine ladifidttela do aot »ppeer to be $ufej
qu$lifleation6
feo -psrtloul&r
am
inmL-wmt In the niaewould be prohibited. h^: the anaetaHsnt of
(s) Stomsfil 0<s©p#ttt^Loi?. for aoisier^ial buaiziesi!1
(d)
o a n ^ t i t i a n for ooa^erclel Mi
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