The plan has been offered to Congress pursuant to provisions of Public Law 109, the Government Reorganization Act passed in 1949. Section 2 of that law provides that the President shall examine the organization of Government agencies and recommend what changes in them are necessary to accomplish the following purposes:

(1) To promote the better execution of the laws, the more effective management of the executive branch of the Government and of its agencies and functions, and the expeditious administration of the public business.

(2) To reduce expenditures and promote economy, to the fullest extent consistent with the efficient operation of the Government. (3) To increase the efficiency of the operations of the Government to the fullest extent practicable.

(4) To group, coordinate, and consolidate agencies and functions. of the Government, as nearly as may be, according to major purposes. (5) To reduce the number of agencies by consolidating those having similar functions under a single head, and to abolish such agencies or functions thereof as may not be necessary for the efficient conduct of the Government.

(6) To eliminate overlapping and duplication of effort.

Public Law 109 was passed by Congress following extensive studies and recommendations on the organization of Government departments and agencies by the Commission on Reorganization of the Executive Branch of the Government. The Commission's objectives. were to promote efficiency and economy within Government departments and agencies. The American Bankers Association is thoroughly in accord with these worth-while objectives.

However, the association believes that Reorganization Plan No. 1 is not in accord with the objectives of economy and efficiency sought by the Commission on Government Reorganization. Of even greater importance, we believe the plan is not in accord with the provisions of section 2 of the Government Reorganization Act of 1949.

These are our reasons. First, this plan now before Congress could by no means improve the present organization or operating efficiency of the Treasury Department. The Secretary of the Treasury now has, under existing law, all the authority he needs to coordinate thoroughly the work of his Department and to achieve efficiency and promote economy. Other than the creation of the proposed Office of Administrative Assistant Secretary, the only Bureau of the Treasury which would be affected by this plan is the Office of the Comptroller of the Currency. Transfer of his authority and functions to the Secretary of the Treasury could not bring about better or faster execution of banking or other laws. The Comptroller has always administered the banking laws with which he is concerned with speed and efficiency. Transfer of his functions to the Secretary of the Treasury could not result in improved administration by either the Treasury Secretary or the Comptroller.

Second, the plan would not promote economy or reduce public expenditures. It would not reduce the number of bank examiners or other personnel in the Office of the Comptroller, even if this were desirable. It could achieve no economy in this respect. Of greater importance, the Office of the Comptroller and all expenses and salaries paid by him are now and have always been supported fully and exclusively by assessments levied on the national banks that his

Office supervises and examines. All of his administrative costs and expenses are paid out of these assessments. No public funds are in any way used by his Office or involved in its operations. The Comptroller is in no way dependent upon appropriations by Congress, or on funds supplied by the Treasury and the taxpayers.

Third, transferring the Comptroller's functions to the Secretary of the Treasury could not increase the efficiency of other Government departments or of Government operations as a whole. His duties concern solely the supervision and examination of national banks and maintaining their soundness. These duties are not related to other governmental functions.

Fourth, Reorganization Plan No. 1 would not assist in grouping, coordinating, or consolidating agencies of the Government in accordance with their functions or major purposes. Instead, the reverse would be the result. It would combine totally dissimilar functions and agencies. Again let me emphasize that the Comptroller is concerned solely with banking supervision. None of his duties are involved in any way with the administrative, fiscal, public debt, or other functions of the Treasury Department, nor should they be. This is as Congress has always intended, in all of the laws it has enacted concerning the Comptroller's office since 1863.

Fifth, transferring the Comptroller's office and functions to the Treasury Secretary would not reduce the number of Government agencies by consolidation of agencies, and there are none of his functions which should be, or could properly be, abolished.

Sixth, there is no overlapping and duplication of effort among Government agencies insofar as the Comptroller's office is concerned. His functions of chartering and supervising only national banks are unique. They do not duplicate or overlap those of other Government bureaus or agencies, either within or outside the Treasury Department.

For all of these reasons, Reorganization Plan No. 1 is totally inconsistent with the purposes and intent embodied in the Government Reorganization Act of 1949, and it is not in harmony with the objectives of efficiency and economy which were sought by the Commission on Government Organization.

Destruction of the Comptroller's independence: Another witness has discussed the historical origin and development of the Office of the Comptroller. We emphasize that it has always been the intent of Congress that his office should enjoy a large measure of autonomy, and should be responsible to the Congress. Reorganization Plan No. 1, however, would divest the Comptroller of all his independence of action and decision. It would make his office only a minor suboffice within the Treasury that could be made subservient to any other official, agency, or employee of the Treasury as well as to the Secretary. In effect, Congress would be divesting itself of its present authority over his functions. The Comptroller would no longer report directly and be responsible to the legislative branch of the Government.

Although the Comptroller's office is classed as a bureau of the Treasury and is subject in several ways to the general direction of the Secretary of the Treasury, it qualifies in every important aspect as an independent agency. There are four tests of the independence of any Government agency. These tests are: Who has the power to appoint to office and does the appointee have full authority to delegate or re

move responsibilities? To whom is the agency responsible and to whom must it report? In whose hands does the control of its funds and its expenditures lie? Who has the authority to determine, influence, or override its actions and decisions?

By all four of these tests or standards, Reorganization Plan No. 1 would reduce the Office of the Comptroller to that of a completely captive, wholly dependent bureau of the Treasury Department.

First: While presumably the President would still have the authority to appoint the Comptroller, with the advice and consent of the Senate, all of his functions and powers could be taken from him at the discretion of the Secretary of the Treasury, or delegated by the Secretary to some other official within the Department. His office could therefore be reduced to that of a titular office only, or could become virtually a sinecure within the Treasury Department.

In passing the Banking Act of 1935, Congress, recognizing the independent status of the Comptroller, intended to effect a further separation of his office from that of the Secretary of the Treasury by taking from the Secretary his authority to recommend the appointment of a comptroller to the President. Under prior existing law, the Secretary made such a nomination, and the President effected the Comptroller's appointment with the advice and consent of the Senate. The reorganization plan now under consideration is completely at variance with the intent Congress expressed in 1935. In effect, it consolidates the two offices and virtually abolishes the Comptroller, or leaves his office merely as a hollow shell.

Second: As has already been pointed out, the Comptroller now submits reports to Congress, and his acts and decisions are directly subject to review by Congress. If all functions of the Comptroller are transferred to the Secretary of the Treasury, as contemplated by Reorganization Plan No. 1, his duty to report to Congress would be taken over by the Secretary of the Treasury and he would be deprived of this independence from the Treasury and his responsibility only to the Congress in this important respect.

Third: The Comptroller has always administered the funds collected by assessments on the banks he examines and supervises. He has always had authority to direct their budgeting and disbursement. However, under the proposed reorganization, he would be stripped of this authority. It, too, would be delegated to the Secretary, and the Comptroller would no longer be able to manage the financial affairs of his own household.

Fourth: The Comptroller's decisions on matters within his jurisdiction are final and binding. They are not reviewable by any other officer of the Government. The reorganization plan would not only take from him this authority, but it would also empower other officials within the Treasury to originate his decisions for him.

Because his decisions ultimately deal with the soundness of the banks, we believe that he, and he alone, should continue to have authority to make them. In making these decisions, the Comptroller is guided solely by the soundness and solvency of the national banking system. To permit another official in the Treasury, who may be influenced by other considerations, to dictate his decisions could jeopardize the soundness and security of the banks.

Measured by these four standards or tests of independence, it is clear that the Comptroller would be deprived of every vestige of

independent thought and action in his decisions. We do not believe that Congress in the best interests of the country would want to divest him of these, or remove his office far distant from the authority of Congress to review his decisions and acts.

Dangers and disadvantages of the plan: There are very definite and specific disadvantages and dangers which can result if Reorganization Plan No. 1 becomes effective. First, let me emphasize that American banking has confidence in the present Secretary of the Treasury. If the plan were to become effective during his term of office, we are confident that he would administer its provisions wisely, and that he would permit the Comptroller's office to continue operating as heretofore. Our concern is with the future, because this reorganization plan would be in effect permanently. We in banking, as well as the Congress, must always look ahead to the future. It is not possible for anyone to know now the administrative intent or the wishes or desires of some future Secretary of the Treasury. Should some future Treasury Secretary elect to exercise all of the powers conferred upon him by this plan, many serious consequences could ensue.

The first of these deals with the banking system itself. The Comptroller's office now has, and always has had, equal prestige with the the other Federal banking supervisory agencies-the Federal Deposit Insurance Corporation and the Federal Reserve System. The threeway balance of authority exercised by these agencies has been one of the important means of providing an effective system of Federal bank-supervisory checks and balances. It also serves as an important mainstay of the dual banking system.

The Comptroller has served as a spokesman for the national banks in matters dealing with their relations with other Federal supervisory authorities supervising both State and National banks. In addition, his office has served to protect the welfare of national banks in their relationships with State-chartered banks. If his powers are absorbed by the Treasury Department, the Comptroller would no longer have sufficient initiative, authority, and independence of action to continue these functions.

The reorganization plan is even more far reaching in its effect on the dual banking system in another respect. The Secretary of the Treasury could make the decisions of the Comptroller of the Currency who is a member of the Board of Directors of the Federal Deposit Insurance Corporation. By this means, a Secretary of the Treasury, if he saw fit, could influence policies affecting not only national banks but also State-chartered banks insured by the FDIC as well. We question not only the wisdom of this, but also the fundamental wisdom of placing the Secretary of the Treasury in an extremely influential position on the Board of another independent agency of Government.

We appreciate this opportunity to present our views to this committee. We have given Reorganization Plan No. 1 careful thought and consideration because the American Bankers Association, like the public and the Congress, wants to see as much efficiency and economy in Government as possible. But we believe that Reorganization Plan No. 1 accomplishes neither of these objectives. It is not conducive to the welfare and soundness of the banks, the dual banking system, the Treasury, or other Government agencies.

I thank you.

The CHAIRMAN. Mr. Peterson, is the real issue in this whole reorganization plan the subjugation of the quasi-judicial powers and functions of this independent establishment to the will or to the veto power or review and reversal power of the Secretary of the Treasury? Mr. PETERSON. That is it in a sense. We feel that the Comptroller's office should maintain its present semi-independent status because his office has provided a standard which many of the State banking departments have followed and which for many years has been an effective agency in the supervision and the guidance of national banks and should not be affected by political expediencies.

The CHAIRMAN. As I understand it, there are certain functions and duties now in the Comptroller of the Currency which are of a quasijudicial nature. In other words, he has the final decision with respect to certain policies and certain actions which may be approved or disapproved. If this plan goes into effect, it would confer the authority and power on the Secretary of the Treasury to review all or any action in that particular capacity and function that might be taken by the Comptroller, and reverse his decision or veto it.

Is that your interpretation of the powers this plan would confer upon the Secretary?

Mr. PETERSON. That is correct. We object to the elimination of his quasi-judicial powers.

The CHAIRMAN. As to the housekeeping functions, in other words, the general supervision, without the authority or the power to influence the decisions in his quasi-judicial functions, does the Secretary now have those powers with reference to supervsion, which we call housekeeping arrangement, over the Comptroller?

Mr. PETERSON. I think he has, sir.

The CHAIRMAN. Would the effect of this plan be comparable to transferring the Interstate Commerce Commission to the Commerce Department and granting the same powers to the Secretary of Commerce to overrule the decisions of the Commerce Commission? Would it be comparable to that?

Mr. PETERSON. It would seem to me to be comparable, sir.

The CHAIRMAN. Here is what I am trying to get at: I served on the Hoover Commission. It was our thought, and I believe we were generally unanimous, maybe with some qualifications, that in the administrative branch of the Government it was desirable to have a continuing line of authority, as we speak of it, for administrative purposes to place the responsibility in the head of the agency that had the direct responsibility and to make all other officers and employees of that agency subordinate to the head of the agency. The question arises in my mind at the moment whether it was the purpose of the Commission in recommending the establishment of this line of authority for administrative purposes to expand or broaden that so as to extend that line of authority and that power to exercise such authority over independent agencies or establishments having quasi-judicial functions. I will have to review the report some to get clear in my own mind just what we may have said about it, but it seems to me that, if we say we are following the recommendations of the Hoover Commission in this plan, I can agree insofar as all of the general administrative and management procedures are concerned, and I can see no objection to the plan, but, when we undertake to take an independent agency that Congress has established as such and make it by