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reserve bank


Dallas, Texas, December 16, 1963

To the Chief Executive Officer o f Each Member Bank
in the Eleventh Federal Reserve District:
On November 22, 1963, the Committee on Government Operations of the House of Representatives
issued a report entitled “ Window Dressing in Bank Reports.” Hearings were held early in October 1963
on this subject by the Legal and Monetary Affairs Subcommittee of the Committee on Government
While legislation was not proposed at this time, the Report of the Committee on Government
Operations included recommendations designed to eliminate the undesirable practice of “ window dressing”
and at the same time to preserve the statistical and supervisory value of call reports.
These recommendations include:
“ 1. That the Federal bank supervisory agencies make a coordinated concerted, continued
use of their powers of moral suasion to have the banking community refrain and desist from
the use of nonpurpose transactions and from window dressing of bank reports and statements.
“ 2. That the Federal bank supervisory agencies adopt uniform rules or regulations under
which, commencing with the second call date in 1964:
“ (a) Every bank shall be required (1) to include in every required and voluntary
report and statement of condition a certification that no window dressing is contained
therein, and (2) to file with its Federal supervisory agency as many copies of such
reports and statements as such agency shall require.
“ (b) Any supervisory agency which finds through bank examination or otherwise
that contrary to such certification a bank has engaged in window dressing shall give
public notice of its findings by publication of the name of the bank, the extent of the
window dressing and other details thereof in the Federal Register and by press release;
and shall refer the matter to the Attorney General for possible prosecution under the
false statements statutes.”
I think it would be very unfortunate if the undesirable practice of “ window dressing” should
require legislation as a means of correction. We will all agree, I believe, that “window dressing” is
an indefensible practice. It is misleading and deceptive and should be eliminated. The answer to the
problem lies with the commercial banks; the problem of “window dressing” can be eliminated if the
commercial banks are determined to stop it; if they do not, the answer may be sought in legislation
or stringent regulation. The challenge should be plain to the commercial banking system.
I am writing this letter to every member bank in the Eleventh Federal Reserve District urging
each bank to eliminate “ window dressing” if it has engaged in the practice, and urging each bank —
large or small — to cooperate in every way practical, by word o f mouth and otherwise, to bring
the practice of “window dressing” to an end. In particular, I request that banks refrain from initiating
nonpurpose transactions or participating in such transactions initiated by others.
I look forward to your support in this matter for I believe the alternative to self-policing and
correction is perfectly obvious.
Yours very truly,
Watrous H. Irons

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