The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
STATEMENT OF CHAIRMAN McCABE ON BEHALF OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM BEFORE THE SENATE BANKING AND CURRENCY COMMITTEE ON S. 2318 Mr. Chairman and Members of the Committee: I believe I could never forget the bank holding company legislation, because when your Committee in the Spring of 194-3 was considering my nomination as a member of the Federal Reserve Board, one of your chief concerns vas with the holding company bill then pending in Congress Some of you will recall that after being questioned at some length I was told to go back and take a sort of a postgraduate course on benk holding company matters and to report back to the Committee after my homework was completed. At that time bank holding company legislation had been carefully considered by this Committee and had been favorably reported; and, in this connection, I would like to request that the report of this Committee with respect to S. 829, the bank holding company bill in the last Congress, be inserted In the record. Your careful study of that bill, together with the fact that the present bill (S. 2318) is in large part similar to it, would almost seem to render unnecessary any comprehensive statement on the subject at this time. However, in view of the many other matters which continuously press upon the members of this Committee for attention and the fact that there has been some change in the Committee membership, I am going to assume that you may not have clearly in mind some of the points regarding this legislation, and I will proceed to state as briefly as I can the more recent developments in connection with the proposed legislation and the reasons why the Board feels that its enactment is necessary and important. -2- Since S. 829 was under consideration by the 80th Congress, the legislation has undergone further careful consideration by the Board, and over a period of a year and a half we have had numerous informal conferences with representatives of a number of groups who are interested. These include the American Bankers Association, the Reserve City Bankers Association, the National Association of Supervisors of State Banks, the Independent Bankers Associations, and various bank holding companies. These meetings, in most instances, were attended by the Comptroller of the Currency and the Chairman of the Federal Deposit Insurance Corporation or their representatives. As a result of these discussions, various changes have been made in the bill so as to take into account and give effect to the best and most constructive suggestions received as well as we have been able to appraise them. I have never known a bill which had more careful and extended study and consideration by all parties who might be interested or affected than has this bill. You will recall that the principal purposes of this legislation are (a) to overcome the inadequacies of the present law relating to holding company affiliates, (b) to regulate the expansion of bank holding companies, (c) to require bank holding companies to give up their investments in nonbanking companies, and (d) to require bank holding companies to register, make reports, and submit to examination. In other words, the basic objectives of S. 2318 are the same as those of S. 829 which your Committee reported favorably in the last Congress. Although the Senate Calendar was such that it was not possible to act on -3— the bill at that time, you will recall that S. 829 had the support of the Federal Advisory Council of the Federal Reserve System (a statutory body that is composed of a banker representative from each of the twelve Federal Reserve Districts and that acts in an advisory capacity to our Board) and of numerous banking organizations, as well as the majority of the major bank holding companies. In its report on the holding company legislation pending in the last Congress, the Federal Advisory Council pointed out that such legislation was urgently necessary, and I would like to submit for the record at this point a letter received in the last few days from the Council, which indicates its general approval of the pending bill. The need for the enactment by Congress of appropriate and effective bank holding company legislation has been recognized by the American Bankers Association and has been reiterated by the Independent Bankers Associations, Moreover, I am advised by the Director of the Bureau of the Budget that the President favors legislation designed to provide for more effective control of bank holding companies, although he has not approved any particular draft of a bill. I should like to emphasize that this bill is not all-embracing* It does not provide a death sentence for bank holding companies; it does not provide for freezing all companies in their present situations; it does not forbid a bank holding company to establish offices across State lines; it does not bring an individual under the restrictions applicable to bank holding companies; end it does not require holding companies to accumulate any greater reserves than does the present law. On the other hand, the bill does require bank holding companies to rid themselves, with reasonable exceptions, of the ownership of companies not engaged in the bsnking business; it provides for the regulation of expansion by bank holding companies; and it provides a means of more effective supervision of bank holding companies. The bill is in no sense revolutionary; it is evolutionary. As I have indicated, S. 2318 is very similar to the bill S. 829 in the 80th Congress, but at this point I think I should mention some of the principal differences between the two: S. 829 included, a preamble which contained the statement that it was the declared policy of Congress "generally to maintain competition among banks and to minimize the danger inherent in concentration of economic power through centralized control of banks". After listening to the various viewpoints expressed as to the desirability of this declaration of policy, it was the Board's feeling that it might properly be omitted from the bill, and it is not included in S. 2318. Some of the groups with whom we discussed the matter, notably the Independent Bankers groups, felt, and I believe still feel, that it would be desirable to retain s provision of this kind. Others, however, felt that it was particularly objectionable and should be omitted. -5- A related change is that vith respect to the provisions of the bill which prescribe certain standards to guide the supervisory agencies in passing upon acquisitions by holding companies or banks of banks or branches. Included among these standards in S. 829 was consideration of "the national policy against restraint of trade and undue concentration of economic power and in favor of the maintenance of competition in the field of banking". In S. 2318 the language has been changed to provide for consideration of "whether or not the effect of such acquisition may be to expand the size and extent of a bank holding company system beyond limits consistent with adequate and sound banking and the public interest". (Sec. 5(d)0 I will comment further on this change a little later. Another important provision in connection with the consideration of the acquisition of banks or branches is that which requires that the appropriate Federal supervisory agency notify the bank supervisor in the State in which the acquiring bank is located of the proposed transaction so that he may submit his views and recommendations on the subject. These must be taken into consideration by the Federal agency in acting upon the proposal. (Sec. 5(e).) The term "bank holding company" in the new bill includes any company which controls a bank operating four or more branches, rather than a bank operating merely one or more branches as provided in S. 829. We feel that the definition as applied to a bank with one branch is too inclusive. (Sec. 2(a).) -6In connection with the authorization to examine bank holding companies and their subsidiaries, S. 2318 contains a provision, not in the previous bill, authorizing use of the reports of examination made by other supervisory authorities to the extent that the information contained therein is adequate for the purposes of the law. (Sec. 3(c).) S. 2318 also adds a new provision permitting a bank holding company to own up to 5 per cent of a nonbanking company or to own an investment company which in turn owns not in excess of 5 VeT cent of any nonbanking company. Ve feel that this provides a reasonable exception to the requirement for the divorcement of nonbanking assets without in any way breaking down the principle which is involved. (Sec. 4-(e)«) S. 2318 contains a new section specifically providing that the enactment of the bill "shall not be construed as preventing any State, to an extent not inconsistent with this Act, from exercising the same power and jurisdiction which it now has with respect to banks, bank holding companies, and subsidiaries thereof." This is intended to eliminate any implication that Congress in enacting this legislation is depriving the States of any power which they have in this field, except where such power would be inconsistent with this bill. (Sec. 13.) There are other differences between S. 2318 and the earlier bill, S. 829, but I believe I have described the more important of the changes. Now, before discussing in mere detail the proposed legislation and the inadequacies of the existing law, a word concerning the nature of bank holding companies might be helpful. -7- The bank holding company problem is, as you know, not a new one to the Congress. Bank holding companies had a rapid growth during the 1920's, most of the major companies being organized in that period. After extensive hearings which began in 1930, Congress recognized the need for and undertook to provide for the regulation of bank holding companies. This legislation was a part of the Banking Act of 1933* However, the inadequacy of the law soon became apparent, and there were recommendations and proposals for new legislation. For example, in a message to Congress in 1938, President Roosevelt recommended the enactment of legislation to prohibit further expansion of bank holding companies and to require their elimination as soon as practicable. In its annual report for 194-3? the Board pointed out in some detail the deficiencies in the existing law and made certain broad recommendations with respect to new legislation. Since then, various bills have been introduced in Congress; and the Board, as well as others, have continued to urge enactment of effective legislation on this subject. Hay I say at this point that we do not regard bank holding companies as being necessarily undesirable; in some instances, they hp.ve been helpful in providing better management for bsnxs, in assisting them financially, and in encouraging improved banking service. Nevertheless, dangerous abuses are possible in the absence of effective regulation. One of these is the unlimited expansion of control over banks. Of like importance is the combining under the same management of large segments of our banking structure with miscellaneous nonbanking businesses. Basically, our view is that bank holding companies should be regulated in much the same manner as banks themselves are regulated. A bank holding company is most likely to be a State-chartered corporation organized to own a majority of the stock of a group of banks and to manage or supervise these banks. However, there is a great variety of factual situations in which, by one method or another, organized groups of persons control banks. A holding company is not necessarily a corporation; it may be a business trust, partnership, or some other organized group. In addition to controlling banks, a holding company may be engaged in other businesses, or in the ownership and control of other businesses, unrelated to banking. Holding companies may themselves be banks, including national banks as well as State institutions. In some instances, there are two or more holding companies controlling the same banks, directly or indirectly. The simplest example of this is where one company owns the controlling stock of another company which, in turn, owns control of a group of banks; but there also are other methods which have been used to establish indirect control. In this connection, it should be mentioned that, without own- ing any of the stock of the banks, a company may indirectly, or even directly, control a group of banks, as in the case of trust arrangements, as well as in other situations. -9Ordinarily, of course, control is based upon stock ownership, but this does not necessarily mean majority ownership; holding companies can and do exercise a controlling influence over banks through the ownership of lesser amounts of stock. The banks controlled by a bank holding company mey include national banks, State member banxs and State nonmember banr..s, whether or not insured; and the major holding company groups usually include more than one class of banks. Bank holding companies range in size from small organizations to large, nationally known organizations controlling a large number of banks in numerous States. Such companies are to be found in almost every section of the country. The proposed legislation, therefore, deals with a problem nation wide in scope. INADECUACY OF PRESENT LAW A discussion of the major provisions of the proposed legislation will be assisted by some explrnation of the present, inadequate law concerning bank holding companies. As a part of the Banking Act of 1933? section 5144 of the Revised Statutes was amended by adding several nev paragraphs applying exclusively to bank holding companies (called "holding company affiliates") and placing limitations and restrictions upon the right of such companies to vote the stock which they owned in member banks of -10- the Federal Reserve System. This section provides that a. holding company, before it may vote its stock of a member bank, must first obtain & permit to do so from the Board. The Board is authorized in its discretion to grant or deny such a permit. As a condition to the granting of the permit, the holding company, on behalf of itself and its controlled banks, is required to agree to submit to examinations, to establish a reserve fund, and to dispose of all interests in securities companies. Present law is optional. - The amendments to section 514-4 provided s means for bringing some bank holding companies under regulation, but left others, even though meeting the same definitions, free from regulation. This is because the law is based solely upon the voting permit. A holding company becomes subject to the law only if a voting permit is issued. But there is no mandatory requirement in the law that a holding company obtain such a permit. Undoubtedly it was believed that all vould do so. Not all hr-ve dene so, however. This is because in many instances holding companies, as a practical matter, can control the operations of banks whether or not they vote their shares in such banks. VJhenever the Board receives an application for a voting permit, it makes a thorough examination of the holding company end its affiliated nonbanking organizations and reviews rerorts of examinations of the affiliated banks to determine what corrections, if any, are necessary to meet basic standards. If such corrections appear necessary, they are -11- made a condition to the gra.nting of the voting permit. In one important case, however, when advised of the need for such corrections, the applying company simply abandoned its application for a voting permit. It was able to control its banks without voting the shares which it owned in these banks, and thus was able to avoid regulation. Clearly the law should apply to all bank holding companies alike. This cannot be accomplished by a law which permits a holding company to elect not to subject itself to regulation. The law must be mandatory to be effective. The present bill provides that all bank holding companies meeting the prescribed definition shall register and shall be subject automatically to all of the regulatory provisions of the statute. Present definition of holding company inadecuate. - Not only does the present law fail to reach those companies which elect not to apply for a voting permit, but it also fails to reach others because of inadequacies in the definition of a "holding company affiliate." The definition in the existing law embraces only those holding companies which control member banks. This excludes from any regulation those companies which operate in all respects as bank holding companies, but which control only nonmember banks, even though the latter include insured banks. Another and more important defect is in that portion of the definition in the existing law which defines a bank holding company as any company "which owns or controls, directly or indirectly, either a -12- majority of the shares of capital stock of a member bank or more than 50 per centum of the number of shares voted for the election of directors of any one bank at the preceding election, * * *." The purpose underlying this part of the statute is to reach those companies which control the management and policies of banks, and with this basic premise we are in agreement. However, as previously pointed out and as Congress and the courts have long recognized, effective control of one company by another does not depend upon the ownership or control of a majority of the voting shares. Thus, the present law in this respect does not cover cases where control is exercised through the ownership of a smaller proportion of the total shares outstanding, or where control is maintained without the ownership of any shares. Similarly, the number of shares owned or controlled, as compared with the number of shares voted for the election of directors at the preceding election is an unsatisfactory basis for determining whether a holding company relationship exists. Such a restricted test puts it within the power of the holding company to establish an absence of control when, in fact, it is at the same time exercising most effective control. The case in which regulation is most necessary may very well be the case in which the attempt is made to take advantage of a deficient definition to escape regulation. -13The definition of a bank holding company in section 2(a) of the bill conforms more nearly to the practical realities of intercorporate relationships. The first part of the definition extends automatic coverage to all companies which own 15 per cent or more of the voting shares of two or more banks, or of one bank operating four or more branches, or of one or more other banks in the case of a company which is a bank. However, provision is made for the exemption of such institutions which would be covered under the definition automatically, if they can demonstrate that they do not exercise a controlling influence over the management or policies of their subsidiary banks. Subsequent provisions of the definition permit the Board to declare an institution to be a bank holding company even though it does not own the 15 per cent of bank stock requisite to automatic coverage under the definition, provided the Board finds, after hearing, that it does in fact control the specified number of banks. This definition we believe is practical, just and essential in view of the prevailing situations. All institutions similarly situated are affected alike. Each has a ready procedure for escaping regulation by demonstrating that it does not in fact exert the kind of influence upon banks which requires that it be subject to regulation. Some question has been raised as to that part of the definition of "bank holding company" in the bill which authorizes the Board, after notice and opportunity for hearing, to determine that an institution is a bank holding company even though it does not own 15 per cent -Hof the stock of a bank. I may say that we have studied this point very carefully and have tried to develop a formula which would constitute a satisfactory definition of the term without giving the Board any discretionary authority. We have approached this problem sympathetically but we have been unable to find a definition based solely upon an arithmetical formula which would do the job adequately. We have also asked those who had some question about this in their minds to suggest a satisfactory substitute for the present definition but no one has brought forward a suggestion which seemed to us to meet the situation. The discretionary authority for the determination of a bank holding company is patterned after similar authority which is contained in the Public Utility Holding Company Act and which has been in operation over a period of some fifteen years. The rights of all parties will be adequately protected under the provisions of the bill, since the Board can determine that a company is a bank holding company only after notice and hearing and any action taken by the Board is subject under the bill to judicial review. NONBANKING ACTIVITIES OF BAM HOLDING COMPANIES One of the most salutary requirements of the bill is contained in section 4. and is designed to limit the nonbanking activities of bank holding companies. To that end, a holding company would be required to divest itself of any securities except those in companies which are incidental to its banking operations, those which are eligible for investment by national banks, or those which represent investments of a relatively unsubstantial nature. Such divestment must be accomplished within a period of two years, or within a maximum period of five years if additional time should be deemed necessary to avoid undue hardship. -15The reasons underlying this requirement are simple. Accepted rules of law confine the business of banks to banking and prohibit them from engaging in extraneous business, such as owning and operating industrial and manufacturing concerns. The lender and borrower or potential borrower should not be dominated or controlled by the same management. As indicated earlier, however, the holding company device has been used to gather under one management enterprises wholly unrelated to the conduct of a banking business. In keeping with sound banking principles, it is necessary that a bank holding company should be required by law to divest itself of any substantial interests in nonbanking ventures. The exception in the bill which permits a holding company to own not over 5 per cent of the voting securities of another company directly or through the instrumentality of an investment company, is not incompatible, we believe, with these principles* If, however, this exception should be used to evade the pur- poses of the law, the bill provides that the holding company may be required to dispose of any such securities. Where, pursuant to the requirements of section h, a holding company distributes its nonbanking assets, such a transaction is given appropriate tax exemption under a provision of the bill prepared with the assistance of the Treasury tax experts. (Sec. 12(f)») -16- BANK HOLDING COMPANY EXPANSION The problem of how far bank holding company systems should be permitted to expand has long been of serious concern. It is in this area that one of the greatest potential evils of bank holding company operations exist* Under existing law, a chartered bank may be prevented by the regulatory agency to which it is subject from expanding its banking offices either by the establishment of new branches or by taking over and operating the offices of other banks as branches. In order to establish branches, national banks must first obtain permission from the Comptroller of the Currency, State member banks from the Board, and nonmember insured banks from the Federal Deposit Insurance Corporation, But a bank holding company is not limited by any such requirements. Through the acquisition by the holding company of the stock of an existing bank which thereafter may be operated, for all practical purposes, as a branch of the holding company system, the denial of a branch application of a controlled bank may become almost meaningless. The holding company device lends itself readily to the amassing of vast resources obtained largely from the public, which can be controlled and used by the relatively few who comprise the management of the holding company, giving them a decided advantage in acquiring additional properties and in carrying out a program of expansion. Such power can be used to acquire independent banks by measures which leave the local management and minority stockholders -17little with which to defend themselves except their own protests. Under section 5 of the bill, this situation would be remedied by preventing bank acquisitions without first obtaining the approval of some agency of the Federal Government* Under this section, any acquisi- tion of the stock or assets of banks by a bank holding company would have to be approved by the Board, If one of the banks in a holding company group wished to acquire the assets of a bank, the acquiring bank, if a national bank, would have to secure the approval of the Comptroller; if a State member bank, it would have to obtain the approval of the Board; if a nonmember bank, it would have to obtain the approval of the Federal Deposit Insurance Corporation, Section 5(d) of the bill enumerates the standards which would guide the banking agencies in deciding whether to approve any such expansion* First, they would have to consider the financial history and condition of the applicant and the banks concerned; their prospects; character of their management; and the needs of the communities involved. As this Committee pointed out in favorably reporting upon this legislation in 19hly these are in general the considerations now specified in the law as the basis for administrative action in connection with the admission of State banks to membership in the Federal Reserve System and the granting of deposit insurance coverage. However, under the bill the agency concerned would also have to consider whether the proposed expansion of a bank holding company or of any banking subsidiary in a bank holding company group would extend the operation -18- of the holding company group beyond limits consistent with adequate and sound banking and the public interest. In this connection, I should point out that this represents a difference in language from that contained in the bill previously acted upon by this committee. The earlier bill contained language which was objected to by a number of groups including nonbanking groups with whom I have met, on the ground that the language was so broad as to present serious difficulties in interpretation. The language which has been inserted in the present bill I believe meets these objections without in any way narrowing the considerations which the supervisory agency may take into account in passing upon questions of holding company expansion. Chief among these considerations, as this Committee pointed out in 194-7, is the anti-monopoly principle enunciated in the Sherman and Clayton Acts. In the discussions which we have had on this bill with the interested groups, the suggestion was made, particularly by the State bank supervisors, that it would be well for the Comptroller, the Federal Deposit Insurance Corporation, or the Board, in considering any proposal for the acquisition of banks or the establishment of branches under this bill, to consult with the appropriate State bank supervisory authority and get his consent before approving the transaction. We discussed this at great length with various groups and among ourselves and while others and we did not feel that it would be practicable to go so far as to give to the State supervisor what in effect would be a veto in the matter, -19- we have included in the bill a provision which requires that in any such case the bank supervisor in a State must be notified and given 30 days in which to submit his views and recommendations. (Sec. 5(e)») As a practical matter, in emergency cases the State supervisor would, of course, be expected to submit his views very promptly. These must be taken into account t*y the Federal agency in acting upon the matter and they become a part of the record in the case. The views of the State authorities will thus be fully considered in each instance and a decision will be reached only in the light of their recommendations. S. 2318, like S. 829 in the last Congress, provides that the Federal Reserve Board shall be the administering agency, because the Board is named as the administering agency in the existing law enacted in 1933 relating to holding company affiliates. However, we are more concerned in this bill with the principles which would be established by it than we are with the question of what agency administers it. It is our view that, regardless of what agency is selected for the purpose, only one agency should be charged with the responsibility for administering it. Ye are unalterably opposed to the administration of this Act by a Board made up of various supervisory agencies for the obvious reasons of efficiency and economy as well as time saving on the part of the executives of the different agencies. Only by naming one agency can there be effective administration of the legislation and responsibility clearly fixed for the carrying out of the Congressional purpose. -20- Section 3(c) of the bill authorizes the Board to make such examinations of a holding company and of its subsidiaries, including bank subsidiaries, as shall be necessary to disclose fully the relations between the holding company and its subsidiaries, but it also provides that the Board may use reports of examination made by the Comptroller of the Currency, the Federal Deposit Insurance Corporation, or the appropriate State bank supervisory authority to the extent that the information contained therein is adequate* As a matter of practice, of course, so far as banks are concerned, we would expect to rely almost wholly upon reports of examinations made by these agencies, instead of making the examinations ourselves. Accordingly, if the Committee should consider it advisable, the Board would have no objection to putting a provision in the bill which would require that the Board obtain the consent of the Federal Deposit Insurance Corporation before it makes an examination of any nonmember insured bank that is a subsidiary of a bank holding company, and the consent of the appropriate State supervisory authority for an examination of a subsidiary nonmember uninsured bank* As to national banks, the examination practice and the relation- ship between the Comptroller of the Currency and the Board in that regard have been long established under existing provisions of the law; this has worked very satisfactorily and the present provisions of the bill would not change the effect of existing law. -21OTHER ASPECTS OF PROPOSED LEGISLATION Under the present law, the only provision which implies a degree of administrative supervision of bank holding companies relates to such examinations "as shall be necessary to disclose fully the relations between" the holding company and its controlled banks, and the further provision that, for violation of the statute or of its agreement with the Board prerequisite to its obtaining a voting permit, such permit of a holding company may be revoked. In that event, certain penalties affecting the banks in the holding company system may be applied. Mien considered in the light of the voluntary aspects of the existing law, such provision falls far short of providing effective regulation. In the first place, the Board's right to examine a holding com- pany is not coupled with the specific power to require corrections* Secondly, the penalties for violation of the statute or of a holding company's agreement with the Board are directed principally at the controlled banks, rather than at the bank holding company. The provisions of the present bill, as previously indicated, would require registration of all bank holding companies (Sec. 3(a))# A bank holding company would be required to file periodic reports, (Sec, 3(b))« It, as each of its subsidiaries, would be subject to examination. (Sec. 3(c)) The more important requirements of the present statute regarding reserve funds of bank holding companies are included as a part of the bill (Sec. 8 ) . Investments by a subsidiary bank in the capital stock of its bank holding -22company would be forbidden and loans by such a bank to its holding company or its other subsidiaries would be regulated (Sec. 6(a) and 6(c)), The terms of any management or service contracts between a holding company and its bank would be open to surveillance (Sec. 7). Finally, the Board would be authorized to make such rules, regulations, and orders as might be necessary to enable it to administer and carry out the purposes of the Act. (Sec. 9 ) . With respect to its effective administration, the bill provides certain sanctions believed to be necessary to assure compliance with its provisions. Thus, if it is found, after notice and hearing, that a bank holding company has willfully violated the Act or any rules, regulations, or orders issued thereunder, the holding company may be forbidden to pay the salary of its officials who participated in the violation, to receive dividends or management or service fees from its subsidiary banks, or to participate in any way in the management or control of any subsidiary bank (Sec. ll(a)). In addition, the bill provides for the criminal prosecvtion of willful violators (Sec. ll(b)) The bill extends a statutory right of judicial review to anyone aggrieved by any action of the Board taken under any of the various regulatory provisions of the bill (Sec. 10(d)), This provision is similar to that contained in comparable legislation in other fields. -23At this time I would like to suggest for the consideration of the Committee two proposed amendments to the bill which we believe are desirable changes9 These amendments, which are of a technical nature and consistent with the general purposes of the bill, reflect the results of further consultation with interested parties. Under the first proposed amendment, a bank would not be a "bank holding company" merely because it may have a subsidiary trust company located in the same city or town. In such a situation, the subsidiary stands in much the same position as a bank's own trust department. The second proposed amendment would exclude from the definition of "bank", those organizations which are engaged principally in international or foreign banking and in whose shares national banks may invest with the Board's permission. This proposal is merely a clarification of the provision already in the bill excluding banks which do not do business within the United States, I ask that these two proposed amendments which I now submit be included in the record. Before concluding this statement, I would personally like to express my deep appreciation to the various banking groups and individuals who have given so much of their time and attention to the consideration of the various points in connection with this proposed legislation and - 2Uhave united with us in trying to bring forth a sound and effective bill which would meet the views of as many varying interests as possible. They have all been most helpful in the discussions of the matter and in submitting constructive suggestions* We are also most appreciative of the helpful consideration which we have had from the Attorney General's office, the Bureau of the Budget, and other Government agencies. We have felt free to call upon any and all of these groups and agencies at any time for their points of view. Their assistance has been most generously given and our discussions have been carried on in a most cordial atmosphere. As I said at the commencement of this statement, the bank holding company problem first came forcibly to my attention when I was before this Committee nearly two years ago. In view of the intense interest of this Committee in the subject, I have made an extensive and what I consider a completely objective and fresh approach to the problem without personal prejudice in the subject, and have reached the conclusion on my own that legislation on this subject is highly desirable from the standpoint of the public interest. It is also desirable in my judgment in order to give the bank holding companies a sort of yardstick by which they can operate, so that they will know what they are lawfully permitted to do and what they may not do. The necessity for appropriate legislation in the field is generally recognized and on behalf of the Board, therefore, I respectfully urge upon your Committee the desirability of prompt and favorable action. 3/1/50
@FedFRASER