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THE COMPTROLLER OF THE CURRENCY,
Washington, April 7, 1950.
United States Senate, Washington D. C.
While I am always at the service of the committee, I do not believe, however, in this instance I would like to participate in the discussions of the matter at issue, which I understand is the President's Reorganization Plan No. 1 of 1950. Very truly yours,
PRESTON DELANO. The CHAIRMAN. The two Senators, Senator Robertson, of Virginia, and Senator Capehart, of Indiana, who have introduced resolutions of disapproval, wish to appear and testify this morning. I am going to ask Senator Robertson and Senator Capehart to testify first in support of their resolutions. Senator Robertson, the committee will be very glad to hear you.
Senator ROBERTSON. Mr. Chairman and gentlemen of the committee, if it meets with your approval I would like to yield 1 minute to the Chairman of the Banking and Currency Committee to present to this committee the resolution adopted by the Banking and Currency Committee in support of the two pending resolutions to disapprove Reorganization Plan No. 1.
The CHAIRMAN. Senator Maybank may proceed.
STATEMENT OF HON. BURNET R. MAYBANK, UNITED STATES
SENATOR FROM THE STATE OF SOUTH CAROLINA
Senator MAYBANK. Mr. Chairman, I merely wish to state that because of the various laws and regulations that pertain to the Comptroller of the Currency being always referred to the Banking and Currency Committee and because of the nominations and so forth, the committee met and decided without a dissenting vote to oppose Reorganization Plan No. 1. I have a short statement here of the reasons for the committee's opposing it. I might say Democrats and Republicans, without a dissenting vote, were in opposition to this plan. All the committee present were unanimous in support of Senator Robertson's resolution and Senator Capehart's resolution.
I will ask that this short statement from the committee be printed as a part of the record.
The CHAIRMAN. It may be printed as a part of the record.
Would you mind stating, Senator Maybank, how many were present?
Senator MAYBANK. A majority were present. If I am not mistaken, we polled those who were absent. Mr. Daniel, you polled most of them, did you not, and there were none opposed to it, were there?
Mr. THOMAS H. DANIEL. No.
Senator MAYBANK. We had a quorum present who approved it, and I asked the clerk who looks after that type of legislation for our committee to poll the other members. You polled those who were in the city. Was there anyone against it? They were all in favor of Senator Robertson's and Senator Capehart's resolution. All those
were polled as well as those who were present. I will say this for Senator Ives. He did not care to be recorded because, being a member of this committee, he wanted to have his mind open, and he did not think that was a proper thing to do, in which I think we will all agree. The balance who were polled and the balance who were present at the meeting all favored Senator Robertson and Senator Capehart in their resolution. You called them all?
Mr. DANIEL. Yes.
Senator MAYBANK. I want to thank Senator Robertson for yielding the time to me to present the committee's attitude on this legislation,
The CHAIRMAN. We appreciate the attitude of the committee and of course will give it appropriate consideration.
(The prepared statement follows:)
STATEMENT OF SENATOR BURNET R. MAYBANK, CHAIRMAN OF THE SENATE
COMMITTEE ON BANKING AND CURRENCY Mr. Chairman, I am appearing before your committee by direction of the Senate Committee on Banking and Currency.
The committee adopted, without dissent, a motion to direct the chairman to express its disapproval of the plan, which would transform certain independent agencies now operating under the supervision of the Secretary of the Treasury into subordinate divisions of the Treasury Department. The concern of the Committee on Banking and Currency arises from the fact that the plan would, in effect, abolish the Office of Comptroller of the Currency, which has supervised national banks continuously since the establishment of the national banking system.
Some of the reasons for the committee's attitude are
1. The uniformly satisfactory administration of the Comptroller's office for more than 85 years.
2. The fact the term of the Comptroller, who is appointed by the President by and with the consent of the Senate, is 5 years, obviously fixed so as to avoid a change at the end of a political administration and to keep the Office out of partisan politics.
3. The fact that the Office is administered without cost to the Government. It is financed exclusively from fees collected for examinations of national banks. Elimination of the Office would therefore not result in any reduction of public expenditures.
4. Although the Comptroller has no jurisdiction over State-chartered banks, the National Association of Supervisors of State Banks has joined with the American Bankers Association and a number of State banking associations in opposing the plan on the ground that it would be a step toward the destruction of the traditional dual banking system.
5. Although the office is under the general supervision of the Secretary of the Treasury, it is essentially an independent agency, responsible directly to the Congress. The Comptroller makes his own recommendations to Congress on matters pertaining to national banks, and formulates his own policies with respect to their control.
I may add, Mr. Chairman, that neither in the Committee on Banking and Currency nor in my extensive correspondence on the subject has there been any intimation that under the present Secretary of the Treasury the supervision of national banks would be adversely affected by approval of the plan. The present Secretary was once a national bank examiner himself, and understands the importance of the impartial administration of the Comptroller's functions. Our concern is as to what might happen under a future Secretary less familiar with and less sympathetic to the efficient and nonpolitical operation of the one agency in the Federal Government exclusively concerned with the supervision and control of banks chartered by the Federal Government.
I should like to call to the committee's attention an article appearing in the New York Times of April 9, and a memorandum on Reorganization Plan No. 1 as applied to the Office of the Comptroller of the Currency, both of which appear in the appendix of the Congressional Record of April 10 on pages A2829 and A2830.
The CHAIRMAN. Senator Robertson.
STATEMENT OF HON. A. WILLIS ROBERTSON, UNITED STATES
SENATOR FROM THE STATE OF VIRGINIA
Senator ROBERTSON. I am sure the analysis of Reorganization Plan No. 1 which you have just inserted in the record will disclose that there are only two items involved. One is to destroy the present independent status of the Comptroller of the Currency and vest those duties in the Secretary of the Treasury, and the other is to give the Secretary of the Treasury an assistant.
I want to say at the outset that I have no objection to giving the Secretary of the Treasury an assistant if he says he needs one. I certainly would not vote to force him to have one and call it a move in behalf of economy in expenditures.
The CHAIRMAN. You can appreciate, Senator Robertson, that for practically all these departments the Hoover Commission recommended an additional administrative assistant secretary.
Senator ROBERTSON. I was not too familiar with that. I thought it was centered primarily on economy.
The CHAIRMAN. With respect to this particular department or agency, that is not different from the treatment accorded by the Commission to other departments.
Senator ROBERTSON. Even a hasty reading of Reorganization Plan No. 1 discloses that after proposing the transfer of all functions to the Secretary of the Treasury, the independent status of certain examiners is exempted and the Coast Guard is left under the administrative control of the Navy. As I say, we are discussing just two propositions. One is the independent status of the Comptroller of the Currency; the other is another assistant. I do not care to comment on that, but I do wish to comment on the first part of this proposal, namely, the independent status of the Comptroller, which he has enjoyed, I believe, for the past 86 years.
To save the time of this very busy committee, I am going merely to read to you a brief summary of objections to Reorganization Plan No. 1 which I presented to the Senate when I introduced my resolution on March 31:
All national banks are against the proposed change.
I will have to revise that statement. Since I introduced this resolution, I have gotten hundreds of letters and telegrams from banks not only in Virginia but from all over the Nation. I got one letter from the president of one national bank saying that he favored the proposed change. I assume that some bank examiner gave him a little trouble once. I do not know. But I will have to revise my statement, and I now say that 999%00 percent of the national banks are opposed. Since I made that statement I find that the State banks in Virginia, in Pennsylvania, and in a number of States that I have heard from have also expressed opposition for fear that this change will ultimately undermine our dual banking system.
I proceed with what I said in the Senate on March 31:
The chairman has said that the Comptroller declined to express an opinion. I would not think it was necessary for a man whose head is about to be chopped off to say, "I prefer to have it left on my shoulders."
So I do not draw any adverse conclusions from the failure of the Comptroller to file a protest about his decapitation.
I continue to read:
I have good reason to believe that the Secretary of the Treasury is not seeking this additional power.
The chairman has just introduced in the record a two-page letter from the Secretary of the Treasury going further than I said he was going to go. I want to take this occasion to say that I admire the courage of a member of the Cabinet who will write a congressional committee considering the recommendation that the President has made and frankly say that he did not see that that recommendation is going to improve either the efficiency of the examination of national banks or save any money, because he said in that letter that Mr. Delano was performing his duties and the examination as efficiently as could possibly be expected. I will not mention further, because it will take up unnecessary time, the reasons given by the Secretary of the Treasury for not supporting this resolution. Those interested in this record can see his letter in extenso. I do commend him very warmly both for his courage and for his fairness in a situation of this kind in stepping forth and giving us a frank expression of his views.
I continue to read:
No economy is involved, since all national banks pay the costs involved in their periodic examination by the Comptroller. No efficiency is involved unless it be claimed that the indirect control by the President through his Secretary of the Treasury of credit policies of the national banks means greater efficiency for a program of deficit financing. That is not the kind of efficiency in which I believe.
The chairman of the Senate Committee on Expenditures in the Executive Departments, to which the resolution will be referred, has assured me that hearings on the resolution would be conducted promptly.
I may pause to say that the chairman has very kindly lived up to that promise. I thank the chairman.
Then, Mr. Chairman, I inserted in the Congressional Record some additional reasons, but I do not believe that it is necessary, since they are in the Congressional Record and will be found at page 4509 of the Record of March 31, for me to proceed further with additional reasons.
The CHAIRMAN. Would you like to insert them in the record? Senator ROBERTSON. I would be glad for my testimony to be followed at this point with the additional reasons that I gave on March 31 for objecting to Reorganization Plan No. 1.
(The matter referred to follows:)
RE REORGANIZATION PLAN No. 1 OF 1950
REASONS FOR OPPOSING THE REORGANIZATION PLAN
1. For 86 years the Office of the Comptroller has enjoyed, and still does, a semi-independent status.
Other branches, bureaus or divisions of the Treasury Department do not possess this standing. The plan, therefore, primarily would affect the Comptroller.
The Comptroller is appointed by the President with the consent and advice of the Senate. He administers the functions of the office under the general direction of the Secretary of the Treasury. He is accountable to Congress through annual reports and through reports on salaries of all bank examiners. He makes recommendations to Congress concerning legislation affecting national banks. He enjoys a position of prestige on the same plane as the heads of other supervisory authorities, such as the FDIC and the Board of Governors of the Federal Reserve System.
The plan would result in the Secretary of the Treasury absorbing all functions of the office and severing the Comptroller's present direct relationship with Congress.
2. The Comptroller's Office does not constitute, in any way, a burden upon our Federal budget.
One of the principal objectives of the Reorganization Act of 1949 is to reduce expenditures and promote economy to the fullest extent consistent with the efficient operation of the Government. With this sound principle we are all in accord.
At this time, the Comptroller's Office is entirely self-sustaining, dependent in no way upon appropriations made by Congress or funds supplied by the Treasury Department. The expenses of the office are defrayed exclusively by the assessments on national banks for examinations made by it. Therefore, no reduction of Government expenditures would result from the proposed reorganization plan.
3. Under the plan the Secretary of the Treasury could effect transfers of the funds of the Comptroller's Office, as well as records, property and personnel.
The sum paid to the Comptroller by national banks therefore would be subject to this provision. The Secretary of the Treasury would have control of these funds and any unused portion thereof could be appropriated and used by him to carry out other functions of the Department.
4. It would be a step toward the breaking down of our existing dual banking relationship
This plan might be only the forerunner of still an additional reorganization plan which would transfer either to the Board of Governors or the FDIC the examining, statistical and other functions of the Comptroller, excepting perhaps the chartering national banks.
5. It would place the Comptroller in an inferior position with relation to the heads of other supervisory bodies, such as the FDIC and the Board of Governors of the Federal Reserve System.
6. The Secretary of the Treasury could reassign duties which might seriously interfere with the efficient operation of the Comptroller's functions.
The Secretary of the Treasury, under the plan, would have complete direction and control over the duties now performed by the Comptroller's Office. The Secretary could authorize any other officer, agency, or employee of the Department to handle any of the functions now performed by the Comptroller's Office. This could lead to serious difficulties in the enforcement of the National Bank Act, as the proper administration of national banking laws requires quick decisions by experienced supervisory authorities, whose decisions are final.
The national banks, at this time, have confidence and are satisfied with the splendid past performance of the Comptroller's Office, and certainly do not desire any change which might in any way jeopardize the same.
7. The plan possibly would involve the replacement of the Comptroller by the Secretary of the Treasury on the Board of Directors of the FDIC, unless the Secretary delegates that function specifically to the Comptroller or to some other official.
8. An Administrative Secretary would be appointed who would perform such duties as prescribed by the Secretary, particularly in supervising and directing the policies and the programs of the Department.
This would inject outside interference in the determination and administration of policies and regulations now carried out by the Comptroller and his assistants.
9. The Office of the Comptroller enjoys the confidence of the national banks of the country.
There are approximately 5,000 national banks in this country, representing over 56 percent of all the commercial banking resources of the United States. These banks look to the Comptroller of the Currency as their sponsor in Washington, a Federal official free to speak and act on their behalf and without censor or influence from a superior. While the banks of the country have the highest respect and confidence in our present Secretary of the Treasury, the Honorable John W. Snyder, there is apprehension that some future holder of this office might use his powers and authority in a way not conducive to sound banking or for the general public welfare. It is a matter of law, rather than a matter of personalities. Over the long years of its existence, the Office of the Comptroller has built up a splendid record. It is our belief that nothing should be done which would in any way disturb the present satisfactory operations of national banks and the public confidence in them.
10. The Office of the Comptroller of the Currency should be kept out of politics.