Full text of Statements and Speeches of Frank Wille : Remarks as Reported in the Official Proceedings of the 79th Annual Convention, Savings Banks Association of New York State, Boca Raton, Florida

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SAVINGS BANKS A S S O C IA T IO N DF NEW YORK STATE
ZO O P A R K A V E N U E - NEW Y O R K , N . Y . 1 0 0 1 7 • A R E A C O D E 2 1 2

6 3 7 -0 2 5 5

lOHN B. POWERS
director of public in for m ation

June 4, 1973

Dear Mrs. Scholl,
Here are Chairman Wille's remarks as reported in the
official proceedings of the 79th annual convention, Savings
Banks Association of New York State, at the Boca Ra'jpon Hotel
and Club, Boca Raton, Florida, JNovember 9-11, 19 72. |i
Hope what you are seeking is here.




Sincerely,

PRESIDENT BRUSH:

Thank you, Mrs. Wallace.

Whatever happens to the philanthropy business down
the road, the foundations can be glad that they have a champion
of your caliber on their side.

ruptcy is nowhere in the future of the corporation headed by
the next speaker. He is an old friend of ours, a distinguished
alumnus of the New York State Banking department.
Ladies and gentlemen, the Chairman of the Board of
the Federal Deposit Insurance Corporation, the Honorable Frank
*

Wille.

i ^ i i n i i i m m ■ i i'ir~ 'iTTiT

n—

(Applause)
HONORABLE FRANK WILLE:

Thank you, Harry.

President Brush, Superintendent Albright, Distinguished Guests of the Association, Ladies and Gentlemen:
For me, it is always a very special pleasure to join your annual
convention.

I enjoy the chance to pick up on some old friend­

ships and to stay abreast of the great changes that seem to
take place every year in the savings bank industry.
Your hospitality is total, particularly after
five o'clock, and I find myself enjoying more and more the fact
that another Superintendent is holding down your anchorman spot on
Thursday mornings.




Being one of your last speakers gives me the chance

221

to be both brief and informative, and I intend to take full ad­
vantage of that opportunity this morning, in outlining for you
four supervisory developments at the FDIC that may affect your
operations in the future.
I

There is hardly a banking agency these days that
is not preoccupied with matters which once would have been
thought outside the scope of traditional concerns for the safety
and soundness of particular institutions.
The responsible agencies are all dealing with such
items as the operating powers of institutions; possible changes
in financial structure, both in the short run and in the long
.
run; market performance of one institution or one group or

f

institutions as opposed to another, and with some complex
questions of fairness -- fairness to borrowers and depositors^ ‘
fairness to creditors and investors; fairness to the communi­
ties the

bank serves, as well as fairness to the bank itself.
The balance between the sometimes conflicting

concerns and conflicting interests remains elusive as the
public and the public emphasis changes, but we in the agencies,
as well as those in positions of legislative responsibility, find
ourselves, as representatives of the public interest, under
increasing responsibility and obligation to shape and influence




222

the balance that is struck.
The program outlined by Superintendent Albright
on Thursday is very much in this pattern, whether it is empha­
sis on consumer powers, interest rate flexibility, or a more
active stance in the matters of consumer complaints, and the ,
\

.

likelihood of consumer requirements for greater disclosure of
your financial results.
This is not to say that the agencies are un­
concerned about the traditional matters of safety and soundness.
Obviously, they are.

But in a country of 14,000 banking units,

only a very small fraction require close supervision as poten­
tial problems.

The FDIC list numbers about 220 such banks

these days, a figure down almost to 10 per cent.

I might add,

between the 1971 and '72 figures, only a handful of that limited
number of banks ever reaches the point of failure.
In contrast to the average of six or seven bank
failures each year throughout the past decade or so, we have
had only one this year so far.

That was the Surety

Bank &

Trust Company in Wakefield, Massachusetts and that one was the result of an embezzlement which was quite totally unpredictable.
We had a somewhat close call earlier in the year,
as you may remember, with the Bank of the Commonwealth in Detroit,




223

which was rescued, if you like, by a rather unique line of credit
granted by the FDIC, the line of credit extending to a total of
$60 million, of which, at this point, only $30.5 million has
been taken down, and which

in the final analysis may amount to

only slightly more than that.

'

j
*
We are pleased with the results which have been • accomplished in the Bank of the Commonwealth, and I am confident
that in the long run that loan from the FDIC will be repaid with
interest and that that billion dollar institution will not cause
significant repercussions throughout the American banking system..
In both of these categories, the problem in failed
banks, I might add, mutual savings banks in New York are con­
spicuous by their absence.

This has been traditionally the case

and is so today.

*

In our supervisory roll, however, as distinct from
our insurance function, the FDIC is busier than ever.

The

roster of state non-member commercial banks examined by the FDIC increases by more than 100 banks each year, a result both
of new charters that are granted throughout the country and by the
continuing withdrawal of Federal Reserve member banks.

* *w

The roster of mutual savings banks, as you know,
remains relatively steady, with some slight reduction because of




224

mergers throughout the year.
Examining some 8300 banks each year, as well as the
increasing attention we, like other agencies, are giving to nontraditional matters in our supervisory efforts, has increased
the workload substantially for both the examination

staff and
V

the executive staff of the Corporation, and it leads me quite
naturally into the first development that I wish to recount and
describe today.
Even before there was a Hunt Commission which you
heard so much about yesterday, there was a group in New York
State called the Mutual Advisory Committee. It was chaired by
Al Mills, and its members numbered some who are here this morning
like Tom Hawks, Charley Brau, Virgil Conway and Francis Reed.
Most of its recommendations affected me directly
as Superintendent of Banks, since they called either for state
legislative action or state administrative action.

Within

two or three years subsequent to its report, virtually all of
those state recommendations were adopted in one form or another
/
by the state Legislature or by the State Banking Department, in­
cluding such items as time deposit powers, day-of-deposit to
day-of-withdrawal accounts, leeway investments and numerous
other changes in our operating powers and procedures.




225

One set of recommendations I never had the time or
the capacity to implement until I became Chairman of the FDIC
had to do with certain aspects

of overlap between federal and

state jurisdiction which occurs because New York savings banks
are examined and regulated both by the State Banking Department
[
and by the Federal Deposit Insurance Corporation.
i

The Mills Committee had recommended closer coopera­
tion between the two agencies, so as to minimize the dislocations
and waste caused by two examinations, for instance, of the same
bank, and by the confusion which might result from trustees
and bank management receiving two quite materially different re­
ports of examination, one from the State Banking Department and
one from the FDIC.

This committee urged the development of a

single report of examination which could be used jointly both
by the state and by the FDIC, and that that one report be transmit­
ted to the bank and that one report alone.
The implementation

of this recommendation1was de­

layed for some time as the FDIC studied revisions in its own
examination form

for mutual savings banks, a report form used

in all 18 savings bank states.

A new uniform report was clearly

in order, because of the many changes in lending and investment
powers for savings banks enacted in one or more of these 18




226

states, and because of important changes in the tax laws af­
fecting mutual savings banks.
We also had increasing agency interest in data
processing operations, consumer protection items, and many of
the non-traditional matters to which I referred at the outset.
Drafts of this revised form were circulated among
the 18 state supervisors, selected banks and your own National
Association, as well as this Association, and we have benefited
greatly from their collective comments.
The nearly final version of that new form has been
developed and it has allowed us to proceed with a single report
of examination for New York State savings banks as a result of
examinations jointly conducted both by the state and by the
FDIC.
In this cooperative effort, with Harry Albright’s
full support and my own, our two staffs, headed on the FDIC
?
?
side by Claude Philipi, our regluridjl (iii6Cuor, and Ed Hottr,
director of our Division of Bank Supervision, and the State of
New York by Dennis Knutsen, the Deputy in charge of savings
banks, and Bernard Gassman, the chief bank examiner, we have
completed and developed an

acceptable joint form of examina­

tion report, reviewing and resolving many of the different items




227

of information presently required by the two agencies,

differ­

ent nomenclature that has been used, different instructions to
our examiners.

We have worked out the details of how this joint

examination could be conducted, and how a single report of
examination could be prepared and transmitted to your banks from
the two agenc ie s .
As to the report itself, it will contain one set
of schedules containing the basic financial information as to
your bank as of the-date of examination. It will contain one
segment of classifications, and this set of classifications will
be based not on the B, C, D and X classifications which hereto­
fore have been used in our mutual savings bank forms, but, rather
by the standards and laws covering the commercial banks.
The adjusted surplus, for those of you will be
getting new vigors, will reflect total net worth 50 per cent
less of the doubtful classifications and 100 per cent of the loss
classifications.
We have developed among the agencies uniform guide­
lines for each of them to use in the classification of mortgage
loans subject in each particular loan case to examiner judgment
and to his own evaluation at the time of examination.




With respect to instalment loans in the consumer

228

category, we intend to use a delinquency formula developed as
a result of joint examinations heretofore put into effect by the
Federal Reserve Bank of New York.

The basic formula requires

that overdue loans, instalment loans which have been overdue
30 to 89

days, be classified substandard and that those which
t

have been overdue more than 90 days be classified doubtful,
with obviously some loss classifications if that is warranted
by the examiner.
Of course, we ran into a situation where, if our
two examination forces were in the same bank and they were look­
ing at the same loans, and came up with a disagreement as to
the classification to be used for particular credits, which
one would prevail as between the two examining agencies* judg­
ment, if, indeed, we were to end up with one report of examina­
tion and one set of classifications?
We did agree among ourselves that the more severe
classification would prevail, and in fact, this may result in a
slight increase which otherwise could not be explained in the
classifications reflected in your examination reports for 1973.
Nonetheless, this seemed to be the most felicitous way of work­
ing on that particular problem between the two sets of examiners.




There will, however, be this one single report of

229

examination, two summary and conclusions pages and two sets of
recommendations, one from the State of New York and one from
the FDIC.

The purpose of this is to allow each agency the in­

dependence and the ability to reflect its own judgment as to
the financial condition of your institution, and to present it
i:
to you in one place with the basic supporting data contained in
the schedules that follow, so that you can expect, even though
you receive one joint report of examination, two sets of con­
clusions and recommendations from your examining agencies.
The report will be transmitted by the New York
State Banking Department with a letter of transmittal signed by
the Deputy or his delegate, and that transmittal letter will
reflect the considered judgment of the Department, but it will
be reviewed by the FDIC prior to the date that you receive it.
We have also tried our best to incorporate a goal
for the return of this examination report, which would bring
it to you within 90 days of the date the examination starts. We
hope very much that this schedule can be adhered to, and I
think that when it is in actual practice you will agree that
the results of receiving one examination report will be well
worthwhile.




We also agreed, in conducting our joint examinations,

230

that the work force between the two agencies will be evenly
divided, both with respect to experience levels and with respect
to manpower, and we

hope

to adhere to that formula of 50

per cent participation in the future.
As we see it, these joint examination report forms
/
have significant benefits to the mutual savings banks of New ‘
York state for a number of different reasons.

You will be get­

ting one report of examination rather than two materially different
reports of examination even from a concurrent examination conducted
at the same time by the two agencies.
On the other hand, you will have the benefit of in­
dependent evaluations by the two agencies.

It will remove much of

the duplicative work of examinations between two examining

t- ~

forces, and the total manhours required should be less than for
two concurrent examinations.

There should be less disruption of

your operating routine and less of a tie-up of your physical
facilities during the course of that examination.
Because the total number of manhours is expected to
be reduced, it is also likely that the fees which will be
charged to you by the State Banking Department, which assesses
for examination costs independent of the FDIC and for a specific
examination,will be lower than they have been heretofore if our




231

hopes hold up.
For the agencies involved there will be a conser­
vation of available manpower which we both desperately need and
that conservation of manpower will occur both in the processing
of the report of examination and in the actual examination itself.

The manpower that we save in that effort can be used

more effectively and better, I believe, in specialized examina­
tions and field investigation reports and in more specialized
compliance efforts*as a result of the new legislation passed
by the Congress on a continuing basis for us and by the State
Legislature on a continuing basis for the New York State Depart­
ment .

~
You may say how close are we to actually intro­

ducing this kind of system and this kind of report.

I can- say

that we have actually started an examination of the Bowery-Savings Bank on October 16, utilizing this procedure.

They

will be the first. We hope to receive this particular joint
report of examination as a result of this examination.
However, we do intend to have two other examinations
of New York savings banks prior to the end of the year, utiliz­
ing the same system, and we are also trying this out in at-least
four other FDIC regions throughout the country where mutual




232

savings banks are prevalent.
We hope, from the sum total of these five, or
six or seven different examinations to be in a position at -the
end of the year to revise our proposed new uniform report of
examination for mutual savings banks

and to proceed from -

i
there to instituting this new form in all of the 18 states wbtich
have mutual savings banks, beginning on January 1, 1973. «•<
The effect of that is that your own examination procedures during 1973 should be conducted according to this
joint procedure.

We may have some lapses in individual cases where

our available manpower of the two agencies isn't in the same place
at the same time, but we are going to do our darnedest to see
that you get a single report of examination from here on out^ *
starting January 1, 1973.

* '

We hope, in time, that other states will welcome
this effort to prepare a single transmittal letter and to prepare
a joint report of examination which can be transmitted to mutual
savings banks in their state.

This, as you know, is a further

development of a recommendation originally made by the Advisory
Committee on Commercial Bank Supervision, which was chaired by
?
Elmer Patterson, now the chairman of the board of the Morgan
Guaranty Trust Company, in which he recommended much the same




233

procedure for commercial banks.
The State Banking Department, while I was
Superintendent, did begin procedures at the Federal Reserve
Bank of New York for developing that kind of joint examination
and joint report of examination.

It has been difficult to ext
tend that same concept to other states because of the varying-^

requirements and because of the great number of commercial
bank examinations which must be conducted by the FDIC and by
the various state departments throughout the country.
We decided, however, to start with the mutual
savings bank industry because we have only 320 some-odd FDIC
insured mutual savings banks, and because so many of them are
concentrated right here in the State of New York.

I think it

will be a significant improvement, and I think that we will
benefit from the experience we gain when we attempt to translate
that into the commercial bank examination reporting forms.*
The second development that we have undertaken
is to allow you to use the New York State form of application
for branches when filing for FDIC insurance on that same branch.
We do not wish to see you go to the expense and the trouble
of preparing duplicate application forms for branches.

We will

have to ask you for a very brief supplement for certain items which
we need to have under our statute which are not required by the



234

State Banking Department.
None the less, the certificate of merit which the
state collects is more than adequate for most of our purposes,
and if, indeed, as Superintendent Albright promises on Thursday,
that certificate of merit i s 'simplified and reduced in scope., you
will, indeed, have a significant improvement of your application
procedures and your ability to file in a timely and least ex­
pensive way with the two agencies.
I might say we have noticed, since the first' of the
year, when your district-wide branching law went into effect,
that there has been a significant increase in the number of
branch applications presented from the mutual savings' bank in­
dustry in New York State. It is running 50 per cent higher than
it was in 1971, even though merger activity seems to tiave been
somewhat lower this year than last.
We believe that this particular increase is only a
token of what the future holds, and that there will be even more
activity as we head into 1976 and statewide branch banking in
New York State.
This is an effort that we are making again, as I
say, to eliminate some of the duplication and waste whenever
two agencies are required to grant approvals for the same




235

application.
There are additional developments which I suspect
you will not welcome quite so readily as the two I have previous
ly outlined.
One has to do with the hearing procedures of the
FDIC and what we conceive and perceive to be the trend of court^
decisions relating to administrative due process for any regula­
tory agency.

We feel an obligation in the light of those judicial

precedents to revise our procedures for handling branch applica­
tions internally within the FDIC.
We will have a publication requirement imposed on
non-member banks that apply for branches.
requirements.

Newspaper publication

Some of you may be meeting that in any event in

New York State.

We will be establishing a public file available

to both applicants and opponents of your application, and we
intend to provide more formalized procedures to assure both
applicants and opponents of application a full opportunity to
be heard before the FDIC's final decision is made.
Within the constraints of these court

decisions

on due process, we will do our utmost to preserve a flexibility
in our procedural arrangements for handling branch applications
and we will do our best to permit the continued expeditious




236

handling of applications which have been approved by the State
Banking Department.

But I think I must say to you that these

new procedures carry the risk of some additional time, of
lenghtening the time that is required for processing of branch
applications to completion.
case.

We hope that that will not be the
i
We will do everything to minimize it.
-r'
But we are reaching a situation where the re­

quirements of administrative due process and the application of
those not only to chartering agencies but to other agencies of
government require us in our judgment, we believe, to provide a
more complete and more effective means of handling applications
as far as proponents and opponents are concerned.
The fourth development has to do with fair housing
lending practices and the further implementation by the FDIC of
the Civil Rights Act of 1968 which, as you know, prohibits dis­
crimination in the field of residential lending, based solely
on race, color, national origin or religion.

It is a subject

which we have been wrestling with at the FDIC for well over a
year now.

You may remember that last December we issued notice

that we were considering regulations in certain areas as a re­
sult of a petition filed with us by a variety of civil rights
groups.

That petition and the discussions that we had at the

interagency level and within the FDIC resulted in April in the



237

promulgation of a policy statement related to lobby posters and
to advertising with respect to residential lending in which we
were trying to make more effective the mandate of the Civil
Rights Act that there be no discrimination based on race, color,
religion or national origin.

i
[

We have subsequently, as you know, issued a
proposed regulation which adds to the requirements of that
policy statement.

The proposed regulation incorporates the items

of the policy statement and adds certain features to it in the
advertising area, particularly,on which your own Association and
the National Association have commented, particularly with respect
to the size of the logo, the lending opportunity logo that might
be required in connection with advertising by a bank.

I suspect

that that aspect of the regulation will be easily adjusted and
corrected.
But in addition to these requirements that ema­
nated from that policy statement, we added requirements that
would require banks to obtain

from, or at least request from

loan applicants certain racial and ethnic data to identify the
census tract in which the property was located on which the
loan was requested, that if a loan were denied the reasons for
the denial of loan be stated and be offered to the loan appli-




238

cant.

And, finally, that each non-member FDIC bank appoint a

fair housing officer with responsibility for bank-wise compliance with these non-discrimination provisions.
This proposed regulation has been out for comment,
With the comment period ending November 1. We received, altogether,
over 100 considered comments by various non-member banks through­
out the country, of which there are 8000 in the commercial banks
and 300 some-odd mutual savings banks.
I would say, if I could characterize the comments
that have been received from the banking industry and from the.
associations which represent them, that all of them vehemently
deny the existence of discrimination in residential lending
based on race, creed, color and national origin.
Having said that and been insistent that their own
banks would continue to grant loans on other criteria or deny
them on other criteria, most of the banks that commented did disagree and did oppose the collection of racial and ethnic
data from loan applicants even on a voluntary basis.

Somewhat

a lesser number opposed the requirement that the census tract
be identified.
As I say, there were some constructive comments
received with respect to




the advertising and logo departments.

239

I have listed about eight different categories
into which these comments fell from the banking industry, and I
will relate them to you, because I want to contrast them with
the comments which we received from the civil rights groups
and petititioners that originated and asked us for action much
Ï
earlier than that, some two years ago.

’• >

The banks commented adversely on what they thought
would be a monumental bookkeeping and recordkeeping required
in the collection of these questionnaires on racial and ethnic
data from the loan applicants , and the requirement that they1
be maintained for not more than two years.

They felt that this

created on all of the banks in the country an unfair burdenbecause of non-compliance with the Civil Rights Act of only a
few banks, and that the retention period of two years was much
too long, although I could comment on that, that the retention
period was initially introduced into the proposed regulation be**
cause of our own examining requirements and the fact that some
banks are not examined from one period to the next without a
lag of some 18 to 20 months.

*- * •

The banks further commented that the racial andethnic questionnaire which would ask a loan applicant to check
off the category that most applied to him, even though this was




240

voluntary, was likely to be offensive to many loan applicants,
that it was an invasion of privacy and that it did not go at all
to the merits of why a particular credit would be granted or
denied.
They stated that the collection of this information
would be of doubtful effectiveness in advancing the non-

‘ -f

discriminatory practices which obviously the agency wished to
see encouraged.

They pointed out that a good many mortgage loan

applications are arranged by telephone and that they do not neces­
sarily lend themselves to the collection of a questionnaire from
a particular loan applicant.
They claim that the proposed regulation might- pro­
vide a disincentive to continue mortgage lending throughout the
country by FDIC banks.

They thought that it was unfair to im­

pose this kind of a requirement on mutual savings banks and non­
member

commercial banks insured by the FDIC unless the same re­

quirements were imposed at the same time on all competitors in the
commercial bank field

or on all mutual savings banks and other

lenders who might not be insured by the FDIC, such as the
Massachusetts savings banks, and by insurance companies and -others
who might be very much involved with residential lending operations.




The banks commented that the existence of this

241

information in the files of the bank, and available to regula­
tory agencies would encourage the filing of false claims of
discrimination and the need for banks to defend themselves in
unfair circumstances against charges of that kind.
They pointed out that in some localities through­
out the country, where minority and ethnic member groups are very
sparse indeed, it would be inappropriate to collect this infor­
mation .
/
And, finally, the pointed out there are some state
\
law provisions in Ohio, Wisconsin, and perhaps even here in New
York, under which the state law has, in the past, taken an ad­
verse view of the collection of racial and ethnic data in connec­
tion with certain types of applications.
The banks commenting recognized that federal require­
ments in this area might prevail, really, but that nevertheless
banks in those particular states did not want to be put in the
position of appearing to violate the state law of the state in
which they had been chartered.
These particular comments, I think, in various
degrees and in various adjectives and expressions, constituted
the bulk of the comments received from the banking industry.




The petitioners, on the other hand, who had

242

originally suggested to tine FDIC and to each one of the federal
regulatory agencies that regulations of this kind be promulgated
and adopted, were quite dissatisfied and disheartened by the
proposed regulation, claiming it did not go by any means far
enough.
They wanted to see it expanded, in addition to
discrimination in residential lending based on race, creed, color
and national origin,

to include any discrimination based on

the sex status of the loan applicant and particularly for the
working woman.
They wanted particularly to extend the discrimina­
tion requirements however described to all lending activity of
the bank on the theory that a loan applicant, discouraged in one
area, would not be likely to come to the bank for a residential
loan and that, therefore, other bank lending practices were just
as much a part of the discrimination problem faced by minority
groups in this country.
They sought, in addition, a provision in the regu­
lation which would extend the prohibitions against discrimination
on the basis of race, creed, color and national origin or sex
to the employment of certain key officials of the bank, including
loan officials and particularly loan appraisers or particularly




243

officers and also appraisers.
They again came back to their request, initially,
that there be kept a log of oral inquiries for applications subjetted to a bank, and they asked that the records be retained
not for two years but for five.

•

.-

You can see, from these two comments, that there
is a wide gap of communication between the two groups.
also don’t seem to be talking about the same things.

They
The points

raised by the banks were not generally acknowledge!or even
answered by the Civil Rights groups, and the points raised by the
Civil Rights groups out of consideration of past experience, tney
say, and also past findings of Presidential commissions on
civil rights in the United States, and other special studies, in­
cluding one conducted just recently this spring by the Home Loan
Bank Board and which indicated significant discrimination in
residential lending, that these requirements just plain did not
go far enough and that much, much more should be done if equal
opportunity for lending were to be accomplished in this country
for all of our people.
I might say to those of you who are distressed
by suggestions put forward by the petitioners that you should be
aware of who they are, because in addition to the particularized




housing groups that are involved in discrimination matters
throughout the country, some local councils, housing councils,
as well as metropolitan and national councils in the housing
area, the following groups were also represented:

the FDIC,

the Federal Reserve Board, the Comptroller of the Currency and
the Federal Home Loan Bank Board for regulations of this kind;
the American Friends Service Committee, the National Association
for the Advancement of Colored People, the National Urban
Coalition of Businessmen and Bankers, and leaders of the black
community, the National Urban League, the National Association
of Real Estate Brokers, and finally, but by no means least, the
League of Women Voters of the United States.
I would say that these groups have had a continu­
ing interest over the years in problems of unfairness and dis­
crimination to loan applicants and to underprivileged people
and deprived people in many different areas of our society.
They are voices that are heard with respect to concern by any re
sponsible public agency.
I might say that we have been importuned by the
Department of Housing and Urban Development, by the Office of
Management and Budget, by the United States Commission on Civil
Rights, also, to adopt regulations of this kind.




245

We have promulgated a proposed regulation out of
our sense of need for affirmative action to implement the non­
discrimination requirements of the Civil Rights Act of 1968.

It

is affirmative action requirement imposed upon us by mandate of
Congress and onefrcmwhich the Corporation is not likely to re(>
treat.
We are, on the other hand, engaged in a fact­
finding process.

The regulations were adopted with a certain way,

with a comment period and with hearings for a purpose, and that
purpose is to obtain the best and most effective regulation we
can which will accomplish our purposes, not to defeat them.
When the proposed regulation was issued, I indi­
cated that the FDIC would hold a public hearing on the comments
that had been received and we intend to do that on Tuesday,
December 19,in Washington. We intend to invite particular banks
that have commented and particular associations that have had
significant comments to make, as well as representatives of
the petitioner, to attend that hearing, and we want them to
talk about each other's problems with this kind of a proposed
regulation and not to be presenting testimony of what seems
to be the abstract, with neither side basically communicating
with the other's problems.




245a

We have questions to ask as representatives and
officials of a responsible public agency.

We would like answers

before we promulgate a regulation of this kind.

And those

questions can be directed both to the petitioners and to the
commenting banks that we represent.
I urge you to consider further these regulations
as proposed and to review, from our public file, the comments
that have been made, through your Association executives and
through your National Association of Mutual Savings Banks in
Washington.
We think these comments should be incorporated
into testimony presented at that public hearing, because it
will be the most effective way of presenting to us answers to ''
some of the questions which have been raised on both sides.
When we had that interchange on the floor of this
convention the other day, between Virgil Jordan and Henry
Waltemade. I couldn't help but feel that the availability of
this information, such as we have proposed to collect within
FDIC regulation, would have been of advantage and not disadvan­
tage in actually having factual information at hand which would
rebut charges of discrimination if that, in fact, were the
case, or to confirm representations of discrimination, if that,




245 b

indeed, were the case.
But the fact of the matter is that today we do
not have evidence available,readily at hand and subject to
examination, and further inquiry by bank examiners in the banking
agencies which would reveal or dismiss the likelihood of patterns
of discrimination by particular institutions.
The basic raw material and factual information to
obtain that kind of information was the purpose of our proposed
regulation, and we -hope that those who commented, ask­
ing us not to collect information as to race, even on a voluntary
basis by loan applicants, who want to come down and object to that
kind of procedure, will come down with a constructive alternative
which will satisfy the fact-finding obligation that we have as
a public agency, if we are, indeed, to promote equal opportunity
in lending for the residential home owners of this country.
So much for that aspect that I wanted to talk
%

about this morning.
I would like to d o s e

by just briefly comparing

some of the problems that we have in Washington in enacting legis­
lation

and in banking matters generally with the kind of action

that you get on the state legislative level.




We are all interested in knowing the outcome of the

246

Hunt Commission recommendations, and this industry, in particular,
is interested in knowing the outcome of the federal chartering
proposals which have been advanced before and will be advanced
again as a part of that Hunt Commission package.
I think it very difficult, having stood both in
/
Albany and in Washington, for legislation in the banking field-to
be passed in Congress. I think it is very difficult to attain
any sort of consensus through the committee process, as they are
presently constituted, and as the control of the Congress is
presently distributed.
I believe that there will be significant road­
blocks in the way of Congressional action, with any degree of
prominence, in the area of the Hunt Commission recommendations.
On the other hand, I am not totally pessimistic.
I think that this sometimes takes quite a long period of time,
but my point is only in comparing the time lag that seems to be
required in Washington with the speed with which action 'can De
taken at the New York legislative level and the New York State
Banking Department.
It was far easier with responsible leadership in
the Department and with responsible leadership in the State
Legislature, both among the majority leaders and among the




committees of the Senate and the Assembly
ing legislation to be enacted.

for responsible bank-

Not only is this true on a one-

shot basis, but it seems to be true on a year-by-year basis,
because, if you look back to 1964, which was the first year I
followed this kind of legislation and activity, there has been a
steady procession of changes in the laws affecting mutual savings
banks at the state level.

You have done terribly well on a con­

tinuing basis, and you are likely to do so in the future, with
the same kind of responsible leadership which I know is present
in Superintendent Albright, a friend of long standing; in Senator
Conklin and Senator Blum of the Banking Committee of the Senate;
in Lou Russo in the Assembly Banking Committee as well.
You have a basically sympathetic legislative leader­
ship, and I must say that I think your odds of obtaining signifi­
cant legislation are greater at the state level than they may be
in the immediate future in Washington.

I regret this, but I think

this to be the case.
So I would hope that you would consider that in
your own posture on legislative matters coming before the Congress
of the United States and the State Legislature.
I look forward to working with Superintendent
Albright in the future, and I would look forward to continuing my




248

very fine relationship and association with you in the years
ahead as I have in the past.
Thank you very much. (Applause)
"PRESIDENTBRUSH:

Thank you, Frank.

As usual,

you have told it like it is.

However, I think you should have
i
started your talk by saying MI have good news and bad news.11
Ladies and gentlemen, I am going to depart from the
script for personal comments I would like to make.
I believe you agree with me that this has been one
fine convention.
has made it so.

Of course, your presence at this convention
But beyond that, I want to acknowledge the out­

standing job of planning and running the program which has been
done by our Association staff as a unit under the able direction
of Ira Scott.

They have made what could have been a difficult

task a pleasant and productive experience, for me as your pre­
siding officer and I am sure for you as delegates.
and thank them for a job very well done.

I commend

(Applause)

Now we are approaching the end of this conven­
tion program, and far be it from me to suggest that we have
saved the best 'til last.

I am sure, however, that you will

agree the final guest speaker was worth waiting for.

For many

years he has been recognized as one of the nation s leading




249

economics and educators.

Among his many stints of public ser­

vice, he was the Chairman of the President's Council of Economic
Advisers from 1961 to 1964 under Presidents Kennedy and Johnson.
Ladies and gentlemen, may I present the Regents
Professor of Economics at the University of Minnesota, Dr.

I

Walter W. Heller.
PROFESSOR WALTER W. HELLER:

President Brush,

Mrs. Wallace, Mr. Wille, Ladies and Gentlemen of the Savings
Banks Association of Neyz York Spit'd:

When my good friend and

yours, who was just mentioned by the Chairman, Ira Scott, asked
me to trade places with Andy Brimmer on your program, he reassured
me by saying that this would put me in the cleanup spot.

^

Well, I have chosen to interpret that figure of
speech in experience rather than the Mew York Sanitation Depart­
ment, and I will try to behave accordingly.
Since my assignment today is to assess future
economic policy and prospects in the light of Mr. Nixon's reelection, I can’t resist sharing with you an incident that occurred
exactly four years ago here in Florida, when I was asked to do the
same thing in the light of
dent.

It was

m £.

Nixon's initial election as Presi­

before the National Wholesale Druggists Association.

They had asked Chet Huntley and Senator Harry Byrd, Jr. and me --