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agency completely detached from the Treasury Department or any other Federal agency. However, the Comptroller of the Currency's historic lodgement in the Treasury Department and the almost uniform recognition by the respective Secretaries of the Treasury of the independent status of the Comptroller of the Currency has forestalled any activity toward this end. Plan No. 1, of course, moves diametrically in the other direction and will by law destroy the independence of the Comptroller of the Currency. In this, it violates every congressional intent from 1863 to date and completely reverses the trend of congressional intent over this span of 87 years in respect of our chartered commercial banking system.
It must be realized, gentlemen, that on May 11, unless this plan is rejected, the powers of the Comptroller of the Currency are automatically transferred to the Secretary of the Treasury, without any action on his part. They are his.
The CHAIRMAN. Is it your view, then, that if the plan goes into effect, it is necessary for the Secretary of the Treasury, in order to reconstitute the powers in the Comptroller, to issue an order accordingly?
Mr. AMBERG. If I read the English language correctly the plan reads:
There are hereby transferred to the Secretary of the Treasury all functions of all other officers of the Department of the Treasury and all functions of all agencies and employees of such department.
The CHAIRMAN. Then for the operation to continue as it is now, if the plan goes into effect, it would be necessary for the Secretary of the Treasury to issue an order redelegating these powers and functions to the Comptroller of the Currency.
Mr. AMBERG. In my opinion the Comptroller of the Currency would have no more authority than the policeman standing on the corner of Pennsylvania Avenue and Fifteenth Street.
The CHAIRMAN. You mean immediately when the plan moves into effect.
Mr. AMBERG. That is my understanding.
The CHAIRMAN. Therefore it would be necessary that the Secretary redelegate all or such of the powers and functions that the Comptroller now performs.
Mr. AMBERG. The Secretary of the Treasury understands it that way, I think, because he says he is going to delegate them to the Comptroller.
The CHAIRMAN. What I am trying to clarify is, once the plan goes into effect, then if we continue the same operation, with the same authority and the same powers and functions vested in the Comptroller, it will be necessary for the Secretary of the Treasury to issue an order to that effect.
Mr. AMBERG. Exactly, and subject to withdrawal at his pleasure in the future on any day.
The Association of Reserve City Bankers, and its individual members, unequivocally urge that plan No. 1 in its present form, in view of its adverse impact on the Nation's chartered commercial banking system and the national economy, be rejected.
Now I would like to address myself to the concern of the chairman, evidently, as to the Hoover Commission. In its report of March 1949 on regulatory commissions under the title, "The Independent Regulatory Commissions," it states:
The independent regulatory commission is a comparatively new feature of the Federal Government.
That sentence, gentlemen, indicates that they did not understand the functions of the Comptroller of the Currency.
The CHAIRMAN. Read that again.
Mr. AMBERG (reading):
The independent regulatory commission is a comparatively new feature of the Federal Government.
Of course, the Comptroller of the Currency has existed since 1853. It consists of a Board or Commission not within an executive department and engaged in the regulation of some form of private activity. In this report the commission on organization has confined itself to a discussion of the organizational problems of these agencies and does not deal with their quasi-judicial or quasilegislative functions.
Senator MUNDT. Are you reading from the Hoover Commission report?
Mr. AMBERG. This is the report itself. It is in the blue cover. The task force reports are in gray, as I remember.
The CHAIRMAN. I might say to the witness that that is what I had in mind. I want to go back over those reports.
Mr. AMBERG (reading):
The nine commissions are the Interstate Commerce Commission, the Federal Power Commission, the Federal Trade Commission, the United States Maritime Commission, the Securities and Exchange Commission, the Federal Communications Commission, Civil Aeronautics Board, Federal Reserve Board, and the National Labor Relations Board.
Clearly, gentlemen, it is quite clear to any one informed about banking, reading the task force of the Hoover Commission on banking and reading the Treasury Department Report which I shall come to later, that the Hoover Commission did not understand the functions of the Comptroller of the Currency. May I say something off the record?
The CHAIRMAN. Yes, you may, and then we will decide whether it should go on the record.
(Discussion off the record).
Senator BENTON. Is it your point that the Comptroller of the Currency was omitted from the report that you just read?
Mr. AMBERG. I think that if the task force and the Hoover Commission itself had been advised as to the status of the Comptroller of the Currency, they would have added the Comptroller of the Currency to this list.
Senator BENTON. Is that not a list of agencies that are independent? The Comptroller of the Currency is not independent because, as we have pointed out several times, the law calls for him performing his duties under the general direction of the Secretary of the Treasury. Mr. AMBERG. Yes, Mr. Senator. I wish I had a copy of the statute here. Has anyone a copy of the statute?
Senator BENTON. Is that not a list of independent agencies?
Senator BENTON. You naturally would have included the Comptroller.
Mr. AMBERG. If you will read the section of the statute where it says he will function under the direction of the Treasury Senator BENTON. I have it right here, if you want it.
Mr. AMBERG. Have you the statute?
Senator BENTON. Yes.
Mr. AMBERG. Will you read it, please?
There shall be in the Department of the Treasury a bureau charged with the execution of all laws passed by Congress relating to the issue and regulation of a national currency secured by United States bonds and, under the general supervision of the Board of Governors of the Federal Reserve System, of all Federal Reserve notes, the chief officer of which bureau shall be called the Comptroller of the Currency, and shall perform his duties under the general direction of the Secretary of the Treasury.
That is the present law.
Mr. AMBERG. All I wished to do was to point out that that language lies right in a statute that has to do with the regulation of the national currency, you see. Naturally, that was a logical thing to do in 1863. The Secretary of the Treasury was one of the few departments, and it had to do with fiscal matters, the national bank currency. That national-bank currency lapsed in 1935 when the circulation privilege of Government bonds went out.
Senator BENTON. This may account, however, for the fact that the Comptroller of the Currency was listed with the other nine agencies. Mr. AMBERG. That may be true. I don't think the Hoover Commission understood that since 1863 and all through the national banking law since 1863 independent powers were granted to the Comptroller of the Currency by name with practically no reference to the Secretary of the Treasury's participation in the performance of those functions. Those are the independent functions that we are all talking about here, not those which have to do with the currency. Incidentally, in 1935 when the national currency went out and the Reserve System currency came in, which was interpolated in that law, the right of the Secretary of the Treasury to designate to the President who should be the Comptroller of the Currency was taken away from him. I think the synchrony of those two things is rather interesting. Senator MUNDT. Were there any bankers on the task force that made its recommendations to the Hoover Commission?
Mr. AMBERG. Not that I know of. I would not state positively. I know of none. I know bankers who were interested in the report had an awful time getting their foot, even their little toe, in the door even to talk about it.
Senator LEAHY. Does the Secretary of the Treasury now exercise any control over the Comptroller?
Mr. AMBERG. In fact? Not that I know of.
Senator LEAHY. Under the statute, under the law, has he the authority?
Mr. AMBERG. There is that aura in view of the language that the Senator speaks of, the aura of that language. Nobody comes to clinches with that because the Secretary of the Treasury uniformly, particularly the present Secretary of the Treasury, has never interfered with the Comptroller of the Currency. He has publicly announced that as his policy.
Senator BENTON. Do you see what the incentive would be to some future Secretary of the Treasury to cause him to do all these things that would be so harmful?
Mr. AMBERG. Yes; I read that as part of my prepared statement, Mr. Senator.
Senator BENTON. I am sorry.
Mr. AMBERG. I can repeat it briefly. Bankers are opposed to the powers of the Comptroller of the Currency being transferred to the Federal Deposit Insurance Corporation because they will tend to appraise our loans and our investments on the basis of risk and effect on their fund. They will make pawn shops out of them. By the same token even we oppose the transfer of the power of the Comptroller of the Currency to the Federal Reserve Board because it is charged with monetary controls, and in times of boom they would want us to cut down too much and in times of depression they would want us to get liberal. We cannot maintain a sound, adequate, and competitive banking system, reflected in all the laws passed by the Congress since 1863 and built up laboriously by trial and error, if we are going to disturb that happy balance now.
Senator LEAHY. Are those transfers contemplated under the plan? Mr. AMBERG. No; they are not. By the same token, bankers oppose this proposed transfer to the Secretary of the Treasury because one of his major functions is debt management, and the Comptroller of the Currency has by law a right to regulate the kind of investment securities that national banks can buy. That applies to all State member banks. I suppose that regulatory power applies to banks holding probably 90 percent, or 95 percent.
Senator LEAHY. He now has that power; has he not?
Mr. AMBERG. The Comptroller has that power.
Senator LEAHY. And he has it under the supervision of the Secretary of the Treasury.
Mr. AMBERG. I would say no.
Senator LEAHY. According to the statute just read, would you not think that that was true?
Mr. AMBERG. I would say no because, if you interpret the location of that language, it has to do with the national currency.
Senator BENTON. It is an argument. That is the point. It is not clear.
I think it is true that it is not clear.
Mr. AMBERG. If you will take the time, Mr. Senator, to read the Federal statutes as I have-it is part of my job to know them and follow them and I have since 1922-you will find, with the exception of a right to appoint the Deputy Comptrollers, he has that power of appointment
Senator LEAHY. The Comptroller has that power?
Mr. AMBERG. No; the Secretary of the Treasury has that power. But that historically again was left with him because, at the time the first Deputy Comptroller was put in the law, the Secretary of the Treasury had the right to nominate the Comptroller himself. So, logically, they gave him the right to appoint the deputy, and they left that in the law.
Senator LEAHY. Do you know whether or not the Treasury Department has construed that statute as of the present time?
Mr. AMBERG. As far as I know, and I can say this I think with some degree of confidence: All of the Secretaries of the Treasury I have known since my advent to the banking field with one exception at one time have religiously observed the independence of the Comptroller of the Currency.
Senator LEAHY. They may have observed it technically——
Mr. AMBERG. They have all recognized it, but none of them has been willing to say point-blank that he cannot.
Senator BENTON. Why would some future Secretary of the Treasury then use his power to corrupt the banking system and to destroy the State banks in a way inimical to the interests of our economy?
Mr. AMBERG. I would not attribute that to any Secretary of the Treasury who could hold his job, but I would say that any Secretary of the Treasury-this is a matter of opinion, of course-charged with debt management, in exercising his very fundamental control over debt management, if he had the right to determine the investment policies of banks in this country holding 90 percent of all the resources of the banks, would be more than human, in my humble opinion, if he weren't influenced by his debt-management problems.
Senator BENTON. I think there is a basic difference between me and many of the witnesses on the basic phase in our processes of government. I have great faith as I look ahead in our processes of government
Mr. AMBERG. I have, too.
Senator BENTON. And I believe any Secretary of the Treasury who attempted all these things which have been charged against future Secretaries of the Treasury would be removed from office or, if he were successful in achieving them, it would then be in line with the temper of the President and the Congress and what was then judged to be the welfare of the people of the United States.
Mr. AMBERG. May I make one observation in respect to that. These things do not happen that fast ordinarily, Mr. Senator. They crawl and they creep. The bankers come down and complain, and finally 5 or 6 or 7 years go by before the situation is crystalized to the point where this protective action you speak of, action by the President, becomes effective.
Senator BENTON. That is a valid point, I agree on that.
Mr. AMBERG. It is insidious.
Senator MUNDT. You may have answered this question earlier, but Senator Benton and I were detained in another committee. I am curious to know whether in past practice Secretaries of the Treasury have ever endeavored to exercise this authority which you anticipate they might exercise inimically in the future.
Mr. AMBERG. Offhand I don't recall any instances. I have seen suggestions of it, but they have generally been pulled away.
Senator MUNDT. You mentioned there was one exception, and I think I have in mind the one that you refer to. Where there was a difference of opinion, did the Comptroller or the Secretary's viewpoint prevail?
Mr. AMBERG. As a matter of fact, that particular instance does not prove my point, but maybe it is the exception that does prove the rule. Back in the war there was a serious pressure that all chartered commercial banks should be forced to buy on a pro rata basis Government bonds. That was postponed by the Comptroller; and, be it said to the unending praise of Secretary Morgenthau, he got into the battle and opposed it strenuously. You see, with another Secretary of the Treasury, I don't know, it is a matter of opinion.
The CHAIRMAN. Any questions? We are very anxious to hear one other witness.