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mk7 FEDERAL BSSEEVS AGENT. 1. Number of examiners Total s a l a r i e s p a i d 2. Number of a s s i s t a n t s Total s a l a r i e s p a i d 3. Number of other employees a t headquarters Total s a l a r i e s p a i d 4. How a r e examiners s e l e c t e d and organized? I s the personnel of the examining f o r c e made up of men q u a l i f i e d and t r a i n e d f o r t h e i r work? 5. I s examining f o r c e capable of conducting an examination, independent of s t a t e f o r c e , of the l a r g e hanks i n your d i s t r i c t ? 6. When a d d i t i o n a l a s s i s t a n c e i s needed f o r examination of l a r g e hanks or f o r o t h e r p u r p o s e s , how s e l e c t e d and from what source obtained - q u a l i fications? 7. S a l a r i e s and expenses p a i d f o r such a s s i s t a n c e ? 8# Bow many examiners do you have capable of making independent c r e d i t i n v e s t i g a t i o n s ? Of t h i s number how many a r e not r e g u l a r l y engaged in t h i s work? Give t h e information a s i n d i c a t e d by the s i x questions below a s to each examiner, a s s i s t a n t and o t h e r employees in t h e department; 1. Name Age 2. Salary 3. Length of s e r v i c e a s examiner 4. Previous experience 5. Any s p e c i a l p e r s o n a l q u a l i f i c a t i o n s 6. General a b i l i t y and p r o f e s s i o n a l judgment 399 - 2 - X-4747 MEMBER STATS BANKS Give the information i n d i c a t e d by the n i n e questions below, by s t a t e s , as to each bank in the d i s t r i c t , making s e p a r a t e l i s t s f o r each c l a s s of banks: 1. Commercial banks Trust companies Savings banks 2. tUaaie and l o c a t i o n 3. Capital 4. Surplus 5. Profits 6. Deposits 7. Loans 8. Fixed a s s e t s 9. Total a s s e t s Commercial & t r u s t companies Trust and savings banks In a d d i t i o n to the foregoing information, p l e a s e give s e p a r a t e l y the information c a l l e d f o r under questions below: 1. ITumber of member s t a t e banks closed in 1925 <?-. Uumber of member s t a t e banks closed in 1926 3. Number of non-member banks 400 - 3 - X-4747 EXPENSES Separate by y e a r s - 1925-1926 1. Number of s t a t e member banks 2. Combined r e s o u r c e s 3. Cost of and charge made f o r examinations 4. Method of a s s i s t i n g banks 5. Traveling expenses 6. O f f i c e s u p p l i e s , p r i n t i n g and s t a t i o n e r y 7. Tehephone, t e l e g r a p h 8. Stenographic 9. Additional h e l p , d t c . 10i All other expenses 11. Has the cost of a l l examinations made been charged? banks not charged and reasons t h e r e f o r , 12. Has cost of a l l c r e d i t i n v e s t i g a t i o n s made been absorbed by t h e r e s e r v e banks? If n o t , give names of banks charged and reasons t h e r e f o r . If n o t , give l i s t of A- X-4-747 J/Mim'TOHi 1. Scope - Do the examinations now made give the ne cessary information to enable t h e Federal Recerve Board to determine whether or not the member banks a r e o p e r a t i n g within the requirements of the Federal Reserve Act, tho r e g u l a t i o n s of the Board and the conditions of membership? Do examinations include complete i n s p e c t i o n of a l l a s s e t s and l i a b i l i t i e s ? 2. Procedure - Do examiners upon p l a c e a l l books, r e c o r d s and maintain custody and c o n t r o l groups of a s s e t s or accounts 3. Frequency 4. Are a l l examinations so conducted as to develop as to each c l a s s of a s s e t s and accounts examined the e s s e n t i a l f a c t s ? (Information in response to t h i s question involves an i n q u i r y as to how an i n d i v i d u a l examiner conducts every s t e p in an examination) 5. What examination of l i a b i l i t i e s i s made by Federal r e s e r v e examiners when making examinations? 6. What examination of l i a b i l i t i e s i s made by Federal r e s e r v e examiners when making c r e d i t a n a l y s i s ? 7. Are p r o o f s of C/D - c a s h i e r s checks, e t c . , c a r r i e d forward from one exami n a t i o n to another (a continuous p r o o f ) by e i t h e r s t a t e department or Federal r e s e r v e examiners-? 8. Any a t t e n t i o n given to bank accounts, e t c . , - r e c o n c i l e d or inspected? 9. Do examiners,during the examination and while a t the and examine t h e f o l l o w i n g : e n t e r i n g bank promptly and immediately t a n g i b l e a s s e t s under s e a l and do they u n t i l work of i n s p e c t i o n as to p a r t i c u l a r has been completed? bank, i n q u i r e into a. Whether the law with r e f e r e n c e to t h e stock ownership of Federal r e s e r v e bank has been complied with? b. Whether the bank has had any withdrawal or impairment of capi t a l s i n c e l a s t examination? c. Whether the bank has unimpaired c a p i t a l s u f f i c i e n t to e n t i t l e i t to be n a t i o n a l bank in same s i t u a t i o n or equal to 60$ with p r o v i s i o n s f o r paying a d d i t i o n a l 40$ out of n e t income? d. Whether the bank r e d i s c o u n t s with Federal r e s e r v e bank paper of a borrower who i s l i a b l e to bank in excess of p r o v i s i o n s of Federal Reserve Act? e. Whether bank c e r t i f i e s any checks a g a i n s t funds which a r e n o t • a c t u a l l y on d e p o s i t a t the time of c e r t i f i c a t i o n ? f. Whether bank has rediscounted with Federal r e s e r v e bank f o r X-4747 EXAMINATIONS (Cont'd) 402 any p e r s o n , company, f i r m . o r corporation any n o t e s , d r a f t s or b i l l s t e a r i n g the s i g n a t u r e or endorsement of any one borrower in excess of 10fo of the unimpaired c a p i t a l and s u r p l u s of the bank, excepting b i l l s of exchange drawn in good f a i t h a g a i n s t actual existing values, g. Whether bank has accepted f o r any one p e r s o n , company, f i r m or c o r p o r a t i o n an amount in excess of 10$ of i t s p a i d up and unimpaired c a p i t a l and surplus? If so, whether excess l i a b i l i t y i s secured by documents or by some o t h e r a c t u a l s e c u r i t y growing out of the same t r a n s a c t i o n as the acceptance? Whether any such acceptances have more than s i x months to run? h. Whether the bank has l i a b i l i t y f o r accepted b i l l s to an amount equal in the aggregate more than one-half of i t s p a i d up and unimpaired c a p i t a l and surplus? If so, whether Federal Reserve Board has given permission to accept such excess? i. Whether bank has accepted in domestic t r a n s a c t i o n s b i l l s drawn in excess of 50$ of i t s p a i d up and unimpaired capi t a l and surplus? j. Whether bank has accepted d r a f t s or b i l l s of exchange f o r the purpose of f u r n i s h i n g d o l l a r exchange? If so, whether Section 13 of the Federal Reserve Act has been complied with? k. Whether the bank has r e c e i v e d s p e c i a l permission of t h e Fed-* e r a l Reserve Board to accept d o l l a r exchange b i l l s ? 1. Whether a l l of the acceptances made by bank drawn in l a w f u l t r a n s a c t i o n s a r e w i t h i n the l i m i t a t i o n a s s t a t e d in Regulat i o n C of the Federal Reserve Board? m. Whether the bank a c t s as a medium or as an agent of a nonmember bank in applying f o r discounts from the Federal r e s e r v e banks? n. Whether the bank makes new loans or pays any dividends when r e q u i r e d r e s e r v e s a r e d e f i c i e n t , o. Whether the bank or any o f f i c e r , d i r e c t o r or employee thereof has made any loan or granted any g r a t u i t y to any bank examiner? p. Whether any o f f i c e r , d i r e c t o r or employee or a t t o r n e y of t h e bank has accepted f a v o r f o r p r o c u r i n g c r e d i t ? q. Whether bank has c o n t r a c t e d f o r the purchase from any of i t s d i r e c t o r s or d i r e c t o r s ' f i r m s , s e c u r i t i e s or o t h e r p r o p e r t y , on terms l e s s f a v o r a b l e to bank than those o f f e r e d to o t h e r s ? If so, whether account was a u t h o r i z e d by m a j o r i t y of the board of d i r e c t o r s not i n t e r e s t e d in the t r a n s a c t i o n ? 408 — 6 — X-4747' EXAMINATIONS (Cont'd) r. s. ^ t. Whether bank has sold s e c u r i t i e s or p r o p e r t y to any d i r e c t o r in r e g u l a r course of business on terms more f a v o r a b l e to such d i r e c t o r than o f f e r e d to others? officers Whether bank has p a i d to any d i r e c t o r , / a t t o r n e y or employee a g r e a t e r r a t e of i n t e r e s t on d e p o s i t s of such person than t h a t p a i d to o t h e r d e p o s i t o r s on s i m i l a r d e p o s i t s ? Whether bank has n o t i f i e d Federal Reserve Board of any i n c r e a s e of c a p i t a l or s u r p l u s or a d d i t i o n a l stock i s s u e s . Do examiners, during the examination and while a t t h e bank, i n q u i r e into Regulation H - Ten c o n d i t i o n s of membership? a. Whether bank has made any change in general c h a r a c t e r of a s s e t s or in scope of f u n c t i o n s such as tend t o a f f e c t m a t e r i a l l y i t s standard maintained a t time of admission to Federal Reserve System? b. Whether bank gives due regard to s a f e t y of customers? c. Whether bank has reduced c a p i t a l without permission of Federal Reserve Board? d. Whether bank has e s t a b l i s h e d branches, agencies or a d d i t i o n a l o f f i c e without permission of Federal Reserve Board? e. Whether bank has c o n s o l i d a t e d or absorbed, purchased or acquired i n t e r e s t in excess of 20$ in another bank, or d i r e c t l y or i n d i r e c t l y promoted a new bank without permission of the F e d e r a l Reserve Board? f. Whether bank has any excess loans? g. Whether bank has d e p o s i t s with non-members in excess of 10$ of i t s c a p i t a l and surplus? h. Whether bank has accepted in excess of 50$ of c a p i t a l and s u r p l u s f o r d o l l a r exchange, or i s gross acceptance g r e a t e r than 50$ of c a p i t a l and s u r p l u s , without permission of the Federal Reserve Board? i. Whether board of d i r e c t o r s have passed r e s o l u t i o n a u t h o r i z i n g interchange of r e p o r t s and information between Federal r e s e r v e bank and banking a u t h o r i t i e s of s t a t e in which bank i s located? j. Whether bank has complied with any o t h e r s p e c i a l c o n d i t i o n s which Federal Reserve Board imposed upon i t a t time of admission to System? X-4747 - 7 4 * SXAI,1IHATI0HS( Cont' d) 404 11. When making examinations do Federal r e s e r v e examiners examine t r u s t de^partments and safekeeping departments - Procedure? Are c o n t r o l l i n g t r u s t documents s t u d i e d and understood s u f f i c i e n t l y by examiners to give them a p r a c t i c a l knowledge of the purposes of the v a r i o u s t r u s t s ? ( S e e , n a t i o n a l bank form on t r u s t s ) . 13. When c r e d i t a n a l y s i s i s made do examiners i n s p e c t and p a s s judgment on p r o o f s of l i a b i l i t i e s passed them by the s t a t e examiners? 13. When making j o i n t examinations, do s t a t e examiners ask f o r or expect a s s i s t a n c e from Federal r e s e r v e examiners when a n a l y s i n g loans or other assets? 14. How f a r do Federal r e s e r v e examiners r e l y on s t a t e examinations? By what means do the Federal r e s e r v e banks determine whether s t a t e exami n a t i o n s a r e adequate f o r t h e i r purposes and a r e the methods by which they determine whether s t a t e examinations should be accepted adequate? 15. Where Federal r e s e r v e examiners p a r t i c i p a t e with s t a t e examiners in t h e i r examinations of s t a t e member banks does such p a r t i c i p a t i o n tend to r a i s e the standard of s t a t e examinations? 16. How soon a f t e r examinations a r e r e p o r t s forwarded to Federal Reserve Agent? How soon a f t e r examinations a r e r e p o r t s forwarded to the Federal Reserve Board? Includes s t a t e r e p o s t s ? 17. When the Federal deserve bank r e c e i v e s r e p o r t s of examinations or makes c r e d i t i n v e s t i g a t i o n s or otherwise o b t a i n s information with r e l a t i o n to the condition of a member bank, i s the information p r o p e r l y analyzed and f i l e d so t h a t i t can be r e a d i l y obtained? 18. Who analyzes r e p o r t s when received? What r e c o r d s a r e kept? t h i s i n f o r m a t i o n used? How o f t e n reviewed? 19. What r e c o r d s a r e h e l d by Federal Reserve Agent of banks examined? they s u f f i c i e n t ? 20. What information i s in the Federal r e s e r v e bank a s r e g a r d s permission to e x e r c i s e t r u s t powers? To accept up to 100$ of c a p i t a l and surplus? 21. Are the examining f o r c e s making adequate c r e d i t i n v e s t i g a t i o n , which i n volve the l o a n p o l i c i e s , personnel and o r g a n i z a t i o n , as well as an a p p r a i s a l of the a s s e t s of a bank? 22. When c r e d i t a n a l y s i s i s made do examiners value and p a s s on any or a l l a s s e t s in a d d i t i o n to loans and discounts? 23. Describe general determining f a c t o r t h a t prompts you to i n s t i t u t e c r e d i t investigations? 24. Are c r e d i t i n v e s t i g a t i o n s conducted r e g u l a r l y of a l l s t a t e member banks whether or n o t s u b s t a n t i a l borrowers? When i s Are m .s * v4< » 25. W 7 # mUMBATIOm (Cont'd) 4.Q5 Where i s credit information obtained other than from statements - this includes a l l assets? 26* i r e the Federal Reserve "banks receiving adequate information as to the Conditions of the state member "banks upon which they may safely act in extending credit? V . ' . 27. Do examiners hold directors meetings in connection with each examination and credit analysis for the purpose of discussing matters subject to criticism and informing directors of the general condition of the bank? 28. Do examiners make a study and embody in report a brief economic survey of each place or section? Does Fetteral Reserve Agent and bank have knowledge of the economic conditions under which the member bank Is , operating? 29. To what extent are Federal reserve banks aware of -the development of unfavorable conditions in member "banks, through their dally contacts cash letters - loans, etc? 30. Are a l l reports called for by the federal Reserve Board verified at time of next examination or credit investigation? 31. Does the Federal Reserve Agent and bank receive a copy? inspected at time of receipt? 32. Who makes examination when bank i s applying for membership? of examination? 33. Who in Federal reserve bank passes upon applications? 34. Conditions imposed at time of application for admission - How followed up? Aire they Nature 38* What records are held pertaining to conditions imposed? Is Federal Reserve Board advised whether conditions are being followed up? 36. Are examiners aware of these conditions when making examinations? 37. When state authorities accept Federal reserve examinations and reports in lieu of their own,do they, when making own examinations, see that conditions imposed by Federal Reserve Board are being followed up? 38* practice of Federal Reserve Agent with respect to making examinations and dealing with unsatisfactory practices and conditions in state banks? In national banks? 39. i Does Federal Reserve Agent receive copies of reports of examination of state bank members from each State Bank Superintendent in the district? Does the Federal Reserve Agent and bank get copies of disciplinary letters written to banks,by state authorities,not la satisfactory condition* and the answers received from them. 40. : ;: - 9 - ummATiom (cont«a) X-4747 , 406 How does your treatment of •unsatisfactory conditions differ as between borrowing and non-borrowing banks? Do both state and federal examiners make specific recommendations in their reports as to the action which, in their opinion, the bank should or mast take to correct conditions? What steps are taken by Federal reserve banks to secure the correction of unsatisfactory conditions in member banks? How far are suggestions and criticisms followed up? In general, what can the federal Reserve Board do to improve examinations in districts or in states where they are most in need of Improvement? Obtain information by states or parts of states in each Federal reserve district that will give an economic picture of the territories referred to. ' •
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