Wyoming can, with the advice and assistance of the respective Federal agencies, apply the desired degree of persuasion and/or force necessary to safeguard Wyoming depositors. Please give this proposed legislation a long, hard look. It is definitely undesirable for State banking as seen from Wyoming. Sincerely yours, DWIGHT D. BONHAM, State Examiner. COMMONWEALTH OF KENTUCKY, DEPARTMENT OF BANKING AND SECURITIES, Re S. 3158, Financial Institutions Supervisory Act of 1966. Hon. THRUSTON MORTON, DEAR SENATOR MORTON: As supervising agency for State-chartered banks and savings and loan associations, we would like to register opposition to the above act. We have a satisfactory relationship with the Federal Deposit Insurance Corporation, the Federal Reserve System, and the Federal Home Loan Bank Board. Our supervisory authority is adequate under Kentucky statutes and any intrusion into this area of authority by Federal agencies should be resisted. Very truly yours, G. D. BEACH, Commissioner. THE STATE OF NEW HAMPSHIRE, Hon. NORRIS COTTON, DEAR SENATOR COTTON: With reference to your letter of April 21, thank you for your interest in my correspondence concerning S. 3158. Since you ask me for some further details with respect to the objection of the banking department of the State of New Hampshire to this legislation, I wish to point out that the American Bankers Association has not taken any definitive stand pro or con for this bill. It is my understanding that originally they would have endorsed the bill, but so many banker-members of this association objected strenuously that the association retrenched for more study before committing themselves. Our own objection here in New Hampshire is that we believe the power that creates financial institutions should have the power to supervise the same. Since our State banks are granted State charters, this department feels that we are adequately staffed and capable of supervising our own institutions. It might be of interest to note that the Federal regulatory agencies that would have the right to issue "cease-and-desist" orders have not been compatible in their exchange of information with one another and particularly between themselves and State supervisory agencies, i.e. San Francisco National Bank debacle. I wish to reiterate with respect to this department that the New Hampshire banks are as Daniel Webster once said "rock ribbed and copper sheathed." We expect them to remain this way and feel that any additional supervisory prohibitions would be unwarranted. Yours sincerely, VINCENT DUNN, Bank Commissioner, Hon. A. WILLIS ROBERTSON, COMMONWEALTH OF VIRGINIA, DEAR SENATOR ROBERTSON: I am sure you are aware of the opposition of the National Association of Supervisors of State Banks and of many bankers, both State and National, to S. 3158, which, with its companion bill, H.R. 14159, would give Federal agencies power to issue orders to stop "unsound practices" and to remove officers or directors of State banks. While no one could reasonably object to giving the proper regulatory agency authority to stop unsound practices or to remove incompetent or dishonest officers or directors of the banks it regulates, I earnestly suggest for your consideration that, under our Federal system, this kind of authority over State banks should be left to the State banking departments and not given to Federal officials. The State corporation commission concurs in this view. With best wishes, I remain, Sincerely yours, THOMAS D. JONES, Jr., STATE BANKING DEPARTMENT, Re S. 3158. Hon. SENATOR CARL HAYDEN, U.S. Senate, Senate Office Building, Washington, D.C. DEAR SENATOR HAYDEN: On March 29, 1966, the administration transmitted to the Congress a proposal to grant the Federal banking agencies additional supervisory authority over banks and savings and loan associations, including cease and desist orders and the bypassing of State regulatory agencies. The authority requested under cease and desist sections of the bill is so all inclusive that if the bill was passed as proposed it would place every financial institution, director, and officer at the mercy of the whims of the Federal employees. As a State supervisory agent I am as much interested as the Federal officials in eliminating from the financial institution field improper conduct on the part of directors and officers, however, I do not feel that it is necessary to give legislative authority to any regulatory agent, State or Federal, which could be the basis for arbitrary or capricious infringement on personal privileges because of honest differences in what constitutes good management operational procedures. To give any regulatory agent authority to "kick out" a director or officer without first giving the individual an opportunity to argue his side of the case in private, is reprehensible in a democratic society of free enterprise. The bill would permit the Federal authorities to ignore the appropriate State supervisory authority in dealing with State chartered institutions, even though the primary responsibility rests with the State authority. To grant authority to Federal employees to bypass State regulatory agencies is an obvious attempt by the Federal agencies to eliminate the dual banking system, and to place the State regulatory agency in a secondary position. This is a definite attempt to abrogate the rights of the State to supervise their own financial institutions. The Federal Home Loan Bank Board is asking, in paragraph (b) on page 22, that section 407 of the National Housing Act be amended so that it will not be necessary for them to give the State supervisory authority having supervision of the institution, an opportunity to overcome the objections of the insuring corporation. In the section entitled (o) "Consultation with State authorities" on page 43, the insurance corporation is required to consult with the appropriate State supervisory authority "to the extent compatible with the public interest" and "with due regard for whatever power and intent such authority may have." Unless this wording is excluded from any bill passed by the Congress I can foresee that the consultation with State supervisory authority would be negligible, if any. The same wording is included in section (m) in title II, page 60, pertaining to commercial banking authorities. Until such time as the Members of the Congress, State supervisors, and the various industry associations have been given positive proof that there are sufficient number of cases requiring cease and desist order action, which cannot be corrected with the present authority invested in the State and Federal agencies, the Members of the Congress should refuse to grant any additional authority to the Federal agencies which could destroy the dual banking system, undercut the authority of State regulatory agents, and through possible arbitrary and capricious tactics cause undue injury to financial institutions and their directors and officers. The Federal authorities, in their testimony, have failed to show that there are sufficient number of current cases which would require cease and desist orders to warrant the passage of this type of legislation. In actuality I do not think they can prove there are very many cases, if any, where they would have to use cease and desist orders in order to correct any condition presently existing. In some of the testimony there was a great to-do about criminal element gaining control of a financial institution for the sole purpose of looting it. Human nature being what it is, criminals could and have obtained control of financial institutions before the insuring and regulatory agencies were aware that they had obtained control. All the State authorities have adequate power to deal with such a situation when it becomes known. It could very well be that if the Congress grants overriding powers to Federal agencies, it will be hindering the State authorities in taking effective action when such action is required. Very truly yours, F. J. STOWELL. STATE OF MONTANA, OFFICE OF STATE EXAMINER, DEAR SENATOR ROBERTSON: We are advised that hearings are now being held before the Senate Banking and Currency Committee on S. 3158. Its companion bill in the House is H.R. 14159. These bills would revamp drastically authority over and supervision of all State chartered insured banks and building and loan associations. The bills provide a "cease and desist proceedings"-or the suspension of an officer or director-and will, as a practical matter, demand compliance with any F.H.L.B.B., Federal Reserve Board or F.D.I.C. orders. There is little need or justification for such dictatorial authority being concentrated in the Washington, D.C. supervisory agencies. These departments are not basically chartering agencies with the accompanying supervisory powers. They presently have the powerful authority to cancel membership, or terminate insurance of deposits and accounts if need be. Our department strongly opposes S. 3158 and this infringement on State supervisory authority. The small number of problem institutions does not warrant giving federal agencies this "life and death" power over State chartered building and loan associations and banks. It has been my experience that through the excellent cooperation existing between my office and the federal agencies, all problems have been dealt with promptly and effectively. If this bill is to become law, it will further deteriorate State rights and weaken the dual systems of both banks and building and loan associations. Some of the Federal regulatory agencies' recent problems arose from lack of communication and cooperation between the agencies. Congress should pass a "cease and desist" order against some of these agencies' regulations which have disrupted sane proceedings for all supervisors. We urge your cooperation to defeat the bill or amend it so State supervisory authority will not be circumvented, and dominating federal authority will not be imposed on our State financial institutions. Please We trust we will have your cooperation in this important legislation. convey your convictions for these state rights to your fellow congressmen on the Senate and House Banking and Currency Committees. Sincerely yours, ALBERT E. LEUTHOLD, (An identical letter was sent to Senator Metcalf.) CITIZENS STATE BANK, Hamilton, Mont., April 7, 1966. Hon. JAMES F. BATTIN, Washington, D.C. DEAR MR. BATTIN: Hearings are now being held by the Senate Banking and Currency Committee on S. 3158 and companion bill H.R. 14159. This legislation gives much cause for concern. Purpose of the bill as stated in the bill is to strengthen the regulatory and supervisory authority of Federal agencies over insured banks and insured saving and loan associations. Some of the reasons for our concern are as follows: For the first time the Federal banking agencies are placed in direct, predominant supervisory role over State member and "nonmember" insured banks. Primarily the FDIC is an insuring agency and not a supervisory agency. It has legitimate interest in matters affecting its insurance risk. The Federal Reserve Board is an agency primarily engaged in the important function of controlling money and credit, with only collateral interest in regulating State member banks which voluntarily accept certain conditions of membership in the System as the price for benefits of membership. There are a great many State nonmember banks in this country, of course, which are not even members of the System. Neither of these two Government agencies are or should be a supervisory agency. We feel this bill is far too drastic in that it gives Federal agencies "life and death" powers over State-chartered banks. This then weakens the supervisory responsibility of State banking departments. We also feel that the drastic power in this bill is unwarranted because of the small number of problem banks. The mere threat of the loss of insurance over the past decade has been sufficient to enable the Federal agencies to handie all serious situations affecting State banks. This "life and death" power to the Federal agencies contains the seed of destruction of the dual banking system and can result in a further drift of banks from the State to the national system. May we therefore request your help in defeating this measure and kindly convey your convictions to your fellow Congressmen in the Senate and House Banking and Currency Committees on this matter. Your assistance in preserving the dual banking system is certainly a statesmanlike goal. Thank you kindly. Sincerely yours, EARLE C. WRIGHT, Cashier. THE TALLAHASSEE BANK & TRUST Co., Senator A. WILLIS ROBERTSON, DEAR SENATOR; I have admired your stand over the years for conservative government, and I thoroughly enjoyed your talk at the Florida Bankers Association a couple of years ago. I was a little shocked to learn the contents of your bill S. 3158. I urge you to consider carefully the far-reaching effect of the continued encroachment by the Federal Government into fields which were reserved by the Constitution for State control and supervision. Very truly yours, T. N. HUMPHRESS. COLUMBIA SAVINGS BANK, Senator STUART SYMINGTON, DEAR SENATOR SYMINGTON: I am writing you in regard to bill S. 3158 which has been introduced in the House as H.R. 14159, which bill places State member and State nonmember insured banks under the direct control of Federal bank supervisory agencies. Traditionally the Congress has recognized the importance to our economic system of the dual banking system and recognized the rights of various States to supervise and control State chartered banks. This legislation would place Federal agencies in a predominant role in such supervision with drastic powers to enforce its wishes. It would appear that the provisions of these bills are far too drastic simply because there may be a few problem banks in the system. At the present time the Federal Reserve System has ample power to control their member banks through the threat of loss of membership and certainly the Federal Deposit Insurance Corporation has ample power to deal with problem banks through their ability to withhold or cancel insurance for such individual banks. The provisions of this bill would give a supervisor life or death powers over State chartered banks and it is my belief that Congress never intended to delegate such powers to the Federal agencies. I earnestly solicit your careful consideration of this bill and further solicit your opposition when it comes before Congress for action. Thanking you for your consideration, Sincerely, H. G. BANKS, President. St. Louis, Mo., April 8, 1966. Hon. STUART SYMINGTON, Washington, D.C. DEAR SENATOR: I would like to voice our objection to bill No. S. 3158. We believe that this would be concentrating too much control in the Federal agencies and would be harmful to the dual system of banking. I presume that the National Association of Supervisors of State Banks has pointed out their findings in which we concur. From the press I note that there is some problem concerning saving and loan associations. If that is where the difficulty lies, why not make the necessary changes only in their supervisory area? I am sending the same letter to Senator Long and we hope that you will exert your good offices to defeat this bill. Cordially yours, ZALIE LEVIN, President. THE PEOPLES BANK OF REEDVILLE, Senator WILLIS ROBERTSON, DEAR SENATOR ROBERTSON: Although we realize that you and Senator Bennett introduced Senate bill 3158, I feel compelled to express to you opposition to this particular bill. I do not feel that the Federal Deposit Insurance Corporation and the Federal Reserve Board should have a more predominant supervisory role over State banks than the State banking departments. Furthermore, it appears to me that it will have an effect of possibly breaking up the dual banking system itself due to a possible transfer of banks from the State to the National banking system. Regardless of the foregoing, I reiterate my strong support for you in the coming election. With best wishes and kindest personal regards, I am, Your sincerely, SENATE BANKING AND CURRENCY COMMITTEE, Washington. D.C. L. ELWOOD TAYLOR, President. THE COMMERCIAL BANK, GENTLEMEN: We would like to register our decided disapproval of proposed banking legislation as set out in bill S. 3158 and companion bill H.R. 14159. In our opinion such legislation would be detrimental to State banks for the following reasons: 1. Supervisory responsibility of State banking departments would be weakened. This responsibility should primarily be that of the State banking department. 2. This bill would give Federal agencies-namely, Federal Reserve Board and Federal Deposit Insurance Corporation-unfair powers over States-chartered banks. 3. State banks might be inclined to relinquish their State charters in favor of a national charter, thus weakening the dual banking system. 4. By the terms of the bill entirely too much authority would be lodged in Federal agencies. Above are our sentiments and we hope you will give serious attention to their content. Respectfully yours, BERT KETTER President. |