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FEDERAL RESERVE BOARD
WASHINGTON
address official correspondence t o
the federal reserve board
October 7, 1924.
s t . U263.
SUBJECT:
Cost of Bank Examination
and Credit work.
Dear S i r :
The wide v a r i a t i o n s in the cost of bank
examination and c r e d i t work as shown by the q u a r t e r l y
f u n c t i o n a l expense r e p o r t s , Form E, indicate t h a t '
the policy with respect t o such work i s f a r from
uniform among the several Federal reserve banks.
,In o r d e r / t h e r e f o r e that the Committee may {
have f u l l information regarding the scope of the
examination and c r e d i t work carried on by your bank
and of the theory upon which your p o l i c y with
r e f e r e n c e t o sach work is based, i t w i l l be apprec i a t e d if you. w i l l kindly f u r n i s h i t with the i n formation called f o r in the attached questionnaires
at your early convenience.
Very t r u l y yours,
Geo. R. James, Chairman,
Committee on S a l a r i e s ,
Expenditures and E f f i c i e n c y .
Enclosure.
LETTER TO CHAIRMAN AT EACH FEDERAL RESERVE BANK
COPY TO GOVERNOR
077
BANK EXAMINATION FUNCTION.
\
8*78
State Bank Members
National
In cooperation
Banks
with s t a t e bank Independent
authorities
1. How many examinations were made of member
banks during the period January t o June 1923
July t o December 1923
January t o June 1924
July t o September 1924
2. How many c r e d i t investigations were made of
member banks during the period January 10 June 1923
July t o December 1923
January to June 1924
July t o September 1924
3. Show separately number of examinations and of c r e d i t i n v e s t i g a t i o n s made in
each s t a t e in your d i s t r i c t since July 1, 1923.
4. Has the cost of a l l examinaticns made since July 1, 1923, been charged to the
banks examined? I f not, give l i s t of banks not charged and the reasons t h e r e f o r .
5* Has the cost of a l l c r e d i t investigations made since July 1, 1923, been absorbed
by the reserve bank? I f not, give names of banks charged and reasons t h e r e f o r .
6. Describe general determining f a c t o r s that prompt you t o i n s t i t u t e credit investigations.
7. Are c r e d i t investigations conducted regularly of a l l member s t a t e banks,
whether or not they are substantial borrowers?
(a)
In a l l s t a t e s in your d i s t r i c t .
(b)
In s t a t e s where examinations made by s t a t e a u t h o r i t i e s are not
acceptable t o reserve bank d i r e c t o r s .
8. Describe b r i e f l y the character and extent of the c r e d i t i n v e s t i g a t i o n s made by
your examiners.
9. a.
b.
c.
How many examiners do you now have?
1. Capable of making independent c r e d i t investigations?
2. Who are not placed in charge of c r e d i t investigations?
Give name an* salary of each examiner and a s s i s t a n t examiner.
What l i m i t is placed on the amount allowed examiners f o r t r a v e l i n g expenses?
(St. 4263a)
-
10. ab.
2
-
Gi re name and s a l a r y of each employee ( o t h e r than examiners) r e c e i v i n g
$2,500 or more p e r anum.
Gize number and average s a l a r y of employees r e c e i v i n g l e s s than $2,500
pe r anum
11. Do you r e c e i v e copies of r e p o r t s of examinations of State bank members from
each S t a t s bank Superintendent i n your d i s t r i c t ?
12. Describe the extent of the a n a l y s i s made of r e p o r t s of examination of (a)
State member banks.
(b)
National banks.
13. Describe b r i e f l y each separate set of records kept in the examination d e p a r t ment and enclose copies of a l l forms used i n the department.
14. Are t h e r e any employees assigned t o the examination f u n c t i o n mho are devoting
a s u b s t a n t i a l p o r t i o n of t h e i r time t o the <*crk of some other function without
a l l o c a t i o n of the expense?
If so give d e t a i l s .
( S t . 42bja)
MAINTAINING- CREDIT INFORMATION EXPENSE UNIT
LOANS, REDISCOUNTS AND ACCEPTANCES FUNCTION
State the number of c r e d i t f i l e s carried by you on corporations, firms,
ships and i n d i v i d u a l s .
partner-
(a) Domiciled in your oxm d i s t r i c t .
(b) Domiciled outside your d i s t r i c t .
How many of the c r e d i t r e p o r t s carried by you on concerns domiciled outside
your d i s t r i c t s were, obtained. ~
(a) Direct from such concerns.
(b) Through the f \ R, Bank of the d i s t r i c t in which the concern i s
domiciled.
(c) Through reporting c r e d i t agencies,
Ho# many c r e d i t f i l e s have been s t a r t e d since January 1, 1924?
a. I s a l l c r e d i t information furnished by the borrowing member banks?
b* If not, what percentage i s obtained frcm other sources?
c. List p r i n c i p a l sources from which such inforrnaticn i s obtained.
a- Do you require borrowing banks to f u r n i s h c r e d i t statements covering a l l
notes rediscounted?
b. If not, what exceptions are permitted?
Do you f u r n i s h blank forms t o member banks on mhich c r e d i t statements of
borrowers are t o be submitted? If so, please enclose sample of each such form.
a* Ho* many subscriptions do you make t o c r e d i t r e p o r t i n g agencies?
b. State name and cost of each service*
c, Eov do you value such service as compared with c r e d i t r e p o r t s received through
borrowing member banks?
a* Do you obtain s p e c i a l r e p o r t s from credit agencies?
b. If so, how many such r e p o r t s have you received since January 1, 1924?
c. What agencies mere they received from and what' was the t o t a l cost of the rer e p o r t s received from each agency?
(St. 4263b)
Do you conduct any special investigation of any c r e d i t information received?
If so, describe b r i e f l y and s t a t e number of employees so engaged.
Do yon consider i t necessary to obtain credit information other than that
shorn in the regular reports issued "by c r e d i t agencies, covering corporations,
partnerships, i n d i v i d u a l s , e t c . , whose paper i s not under rediscount with
your bank?
a.
b.
c.
How many employees do you have i n your c r e d i t department ?
Give name, t i t l e and annual salary of each employee receiving $2,500
or more per anum,
Give number and average salary of employees receiving l e s s than $2,500
per anum.
Describe b r i e f l y each record kept i n your c r e d i t department and f u r n i s h
copies of a l l forms used,
(St. 4263b)
@FedFRASER