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sary an analysis of the number of borrowers in common between the First National City Bank of New York and the County Trust Co., since our knowledge gained through examinations of New York City and Westchester banks indicated that this would not reveal information of significant relative importance. It is our understanding that less than 1 percent of the domestic business of the First National City Bank of New York originates in Westchester County and less than 3 percent of the business of the County Trust Co. originates in New York City.

4. Extent of activity of the three banking institutions in deposit operations, giving the amount of each category of deposit (domestic and foreign correspondent bank demand and time deposits), the number and general location of depositors under each category, the charge for servicing deposit accounts and interest paid on savings deposits, the number of depositors in common between the County Trust Co. and the First National City Bank and/or City Bank Farmers Trust Co.

A comparison was made of the deposits and the interest rates of the three banks together and individually with the deposits of other commercial banks located in Westchester County and New York City. No breakdown was made with respect to the various categories of deposits of depositors in common for substantially the same reasons as are outlined in paragraph 3 above. Service charges were not compared as it is reasonable to assume that no change of significant importance in this field would grow out of the proposed transaction.

5. Extent of activity of the three banking institutions in such nonbanking fields as real estate, insurance mutual investment funds, etc., specifying the nature or type of business transacted in each category, the amount of operating income received from each category, and the amount or percent of operating income each of these nonbanking activities represents in the total operating income of each bank, and clients or customers of these nonbanking activities in common between County Trust Co, and the First National City Bank and/or City Bank Farmers Trust Co.

National banks are not authorized by law to engage in the real estate business other than that which would be inciilental to the disposal of realty ac. quired in the satisfaction of a debt or the sale of real estate legally acquired for banking accommodations and no longer used for that purpose. It is our information that City Bank Farmers Trust Co. and the County Trust Co. do not engage in the real estate business as such. Other than a few specially chartered banks in New York State, no State bank or national bank in cities of the population size of New York City or White Plains, N. Y., may legally act as an insurance agent. The direct operation of a mutual investment fund for the participation of the general public is not engaged in by any of these three institutions. They may act in fiduciary capacity for others as custodian, agent, or trustee, but they do not act directly in this field. One of the three banks in acting in a few instances in a custodian or agency relationship for mutual funds, hut does not have discretionary investment powers. We do not find this to be a factor of any weight in judging the competitive effects of the proposal.

6. Indicate the nature and extent of services the proposed holding company will furnish to its constituent banks.

The First New York Corp. would have as its main function the holding of stock in banking institutions. We considered the nature and extent of services the proposed holding company would offer its constituent banks. We understand that the corporation would provide buying services for these banks which would permit the acquisition of necessary supplies to better advantage, and would probably maintain a controller's department which would examine the constituent banks.

7. Indicate for each of the three banking institutions its legal or equitable stock or asset interest or ownership in other banks, financial institutions or commercial enterprises, specifying as to the amount and type of interest and the nature of such businesses.

We investigated for each of the three banking institutions its ownership of stock or asset ownership in other banks, financial institutions, or commercial enterprises and found nothing which would reflect unfavorably upon the holding corupany proposal or its competitive aspects.

In addition to our comment on questions in the letter of the Department of Justice, you ask us to advise you whether, before recommending Federal Reserve Board approval, we investigated each of nine other matters. They are dis. cussed in order.

1. Concentration of commercial bank assets in Westchester County. 2. Concentration of commercial bank assets in New York City.

We made an investigation into the concentration of assets of commercial banks and savings banks in New York City, Westchester County, New York City and Westchester County combined, New York City, Westchester County, and Nassau County combined, and New York State to determine the relative percentages of the whole held by each bank involved in the proposal, by the three banks as a group, and also as compared to all other commercial bank and commercial and savings banks combined. This study included in the same manner the loan and deposit fields separately, and the number of banking offices of the banks in the same areas.

3. Merger history of the First National City Bank. The merger history of the First National City Bank of New York is a matter of record in this office, and no special investigation was necessary to obtain information needed for our consideration.

4. Merger history of the County Trust Co.

We looked into the chronological history of the County Trust Co. beginning with the date organized in 1903. We also considered the history of City Bank Farmers Trust Co. beginning with its origin on February 28, 1822, as the Farmers Fire Insurance & Loan Co.

5. Relationship between population and bank deposits in New York City.

We considered the population to bank deposit relationships, and included employment trends in New York City and suburban counties. Our deposit study covered Westchester County, New York City, Westchester County and New York City combined, and New York State, with appropriate comparisons of the whole in each case with the banks involved individually and as a group.

6. The number or thrift accounts controlled by the First National City Bank as compared with the total number of thrift accounts of commercial banks in New York City.

7. The number of thrift accounts of the County Trust Co.

In our study of the deposit structure of these institutions, it developed that the three banks had total savings deposits of $775 million, an amount equal to less than 13 percent of their combined deposit liabilities on June 30, 1956. Of this suin, County Trust Co, held $123.8 million. Similar deposits held by mutual savings banks in New York City amounted to $13.2 billion, in Westchester County $380 million, and for New York City and Westchester County combined $13.6 billion. Thus the number of thrift accounts held by the three banks, individually or collectively, appeared to have little bearing upon the competitive aspects of the proposal, and we did not specifically investigate the number of thrift accounts held by each bank.

8. An analysis of the book and market values of the First National City Bank and County Trust Co. stock in order to ascertain whether either of these two banks had experienced difficulty in raising capital.

We made an analysis of the values of the capital stock of each of the three banks, taking in account book values, market values, and fair values. Our investigation was based upon factual data so that we could determine whether the proposed basis of exchange of stock of each of the banks for shares of the holding company would be fair and equitable. The National City Bank of New York, before its merger with the First National Bank of New York, sold additional shares of capital stock, thus adding $131,250,000 to its capital funds. It is our opinion that these banks would not experience difficulty in raising capital iwder normal market conditions.

9. Competitive effects of the holding company plan on banking competition in Westchester County including the position taken by officials of banks that compete with County Trust Co.

We considered the probable competitive effects of the holding company plan on banking competition in Westchester County and nearby areas and including the positions taken by the 2 bank officials and 1 individual who expressed their views to us.

We are pleased to supply this information and hope that you will find it helpful. Sincerely yours,

RAY M. GIDNEY, Comptroller of the Currency. Mr. HOLTZMAx. The next witness is Mr. H. E. Cook.

TESTIMONY OF H. E. COOK, CHAIRMAN, BOARD OF DIRECTORS, FEDERAL DEPOSIT INSURANCE CORPORATION; ACCOMPANIED BY ROYAL L. COBURN, GENERAL COUNSEL; MAPLE T. HARL, DIRECTOR; EDISON H. CRAMER, CHIEF, DIVISION OF RESEARCH AND STATISTICS; AND NEIL G. GREENSIDES, ASSISTANT TO CHAIRMAN (ACTING), FEDERAL DEPOSIT INSURANCE CORPORATION

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Mr. HOLTZMAN. Mr. Cook?
Mr. (OOK. Yes, sir, Mr. Chairman.

Mr. HOLIZMAX. If you desire, you may insert your statement, and then make whatever comment you would like, and give the committee an opportunity to ask you some questions.

I understand you have another engagement, and we will be delighted to

Mr. Cook. Yes, sir, quite an important one we would like to keep, if we could get away by 4 o'clock.

With me is my associate, Director Harl; and our General Counsel, Mr. Coburn; and Mr. Neil Greensides, my administrative assistant; and Dr. Cramer of our Research and Statistics Division, if you can find a chair someplace, Doctor.

Mr. HOLTZMAN. All right, we will consider the statement in the record, and if you have some other comments you would like to make, we will be very happy to receive them.

Mr. ("OOK. They will be brief, unless you desire to explore them, sir.

Mr. Chairman and members of the committee, we have been asked to appear before your committee to express the views of the Federal Deposit Insurance Corporation on H. R. 264 and H. R. 2143. Both of these proposals contemplate the amendment of section 7 and section 15 of the Clayton Act.

While they are similar in purpose, they are not identical in lanyuage, although substantial portions thereof are identical. Since my remarks are directed only to those provisions which pertain to banks and banking, and in this particular the proposals are identical, I shall not attempt to distinguish between the two.

Mr. HOLTZMAN. Mr. Cook, will you forgive me for interrupting you. I don't think you heard me before—if you care to, you may insert your statement in the record, and it will so appear, and then if you have some additional comments you would care to make, we will be happy to receive them, in the interests of saving time.

Mr. Cook. We appreciate your consideration, sir, to save our time, because we have some important things yet to do today.

I would be pleased, Mr. Chairman, if you have any questions
Mr. HOLTZMAN. The statement will be inserted just as though read.
Mr. Cook. Thank you, Mr. Chairman.

Since the Corporation is solely concerned with banks, and since it has had no experience that would be of benefit to the committee outside the field of banking, our remarks are addressed to those provisions which would include banks and banking transactions within the purview of the proposed legislation.

At the outset, it is well to comment that these proposals again present for the consideration and determination of the Congress the issues as to whether bank merger transactions shall continue under the exclusive jurisdiction of the Federal bank supervisory agencies, or whether the Department of Justice shall be given a major portion of the responsibility in this field, as proposed in these amendments.

I appeared before your committee during the last session of the Congress, and expressed my opposition to legislation similar to that here under consideration, and I advised your committee that, in my judgment, the avowed purposes of the proposed legislation would best be accomplished through other legislation.

As you know, during that session of the Congress, the Senate passed the so-called Fulbright amendment to the Federal Deposit Însurance Act, under which authority to pass upon the propriety of bank merger transactions was vested in the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation, in accordance with the long established formula for the division of bank supervisory authority.

My views on this subject matter have not changed from those expressed on my former appearance.

The Senate Banking and Currency Committee has just concluded public hearings on the proposed Financial Institutions Act of 1957, which, as the title indicates, purports to codify and bring up to date banking and financial laws.

Prior to the hearings, but after a study of existing laws and a consideration of agency recommendations, the committee prepared a print of the proposed act, which included, as one of the new sections, à restatement of the Fulbright amendment.

Earlier this week the committee filed for congressional consideration the committee bill, and this bank merger proposal is contained in the proposed act.

The so-called Fulbright amendment was drafted by the joint staffs of the three Federal bank supervisory agencies. It represents the best of their combined judgment in the field in which they are most experienced.

At the hearings that have just been concluded, representatives of the Corporation gave their unqualified approval to this proposal.

In the consideration of the current proposal, it would be well to again call your attention to the fact that banking is probably the most regulated and supervised industry in the Nation.

With a dual banking system, subject to both State and Federal Jaws, and superintended by both State and Federal authorities, we do. not believe that there is need for imposing another Federal agency upon the banking industry.

It is to be noted that the provisions of the Clayton Act presently are not applicable to other businesses and industries that are subject to supervision and control. Thus, it is to be noted that the last paragraph of section 7 of the Clayton Act specifically excludes froin its application transactions duly consummated pursuant to the authority of the Civil Aeronautics Board, Federal Communications Commission, Federal Power Commission, Interstate Commerce Commission, Securities and Exchange Cominission, and the United States Maritime Commission.

We sincerely submit that the same considerations which prompt the exclusions above mentioned should be equally applicable to transactions approved by the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, or the Federal Deposit Insurance Corporation, and, accordingly, we recommend that section 7 be amended to provide such exclusion.

This recommendation is based on the premise that the Congress will, in its judgment, see fit to enact the proposed Financial Institutions Act of 1957, which includes the so-called Fulbright amendment.

My principal objection to the proposed legislation presently under consideration by your committee, insofar as it pertains to bank merger transactions, may be briefly stated as follows:

1. I believe that the screening of bank merger transactions should be performed by the established bank supervisory agencies, with powers and authorities granted by the provisions of the banking laws, as distinguished from the Clayton Act terminology.

2. I believe that the guide for the agency screening such transaction should take into consideration banking factors as well as competitive factors, so that competitive factors shall not be the sole criterion in determining the properiety of such transactions.

3. Finally, I believe that the empowering legislation should be stated in terminology precisely applicable to banking transactions, so that the agencies may make public welfare the heavily weighted criterion.

The several Federal bank supervisory agencies have a more detailed knowledge concerning banks and banking, and the relation of individual banks to competing institutions and to their customers, than is possible to be obtained by any agency not dealing daily with the problems presented in this field.

State and Federal supervisory authorities make detailed examinations of every insured bank in the United States each year, in which examinations there is an asset appraisal and an evaluation of management policies.

Periodic reports of examination are augmented by call reports of condition, certified statements of assessment liability, field visitations and investigations, and other data obtained by or submitted to the anthorities.

These agencies, in order to discharge their statutory functions, are obliged to follow the growth, development, and practices of each bank as a continuing responsibility.

The reports of examination provide the agencies with a source of information and data concerning the needs of the several communities, and the economies thereof, that is not obtainable by any other means.

The knowledge gained from the day-to-day and year-to-year review of examination reports and other data presented to them renders the supervisory authorities singularly well-qualified to determine the effect and propriety of any merger, consolidation, or asset acquisition transaction involving banks under their respective supervision.

No investigation or review by the Department of Justice of the facts of any merger transaction can be an adequate substitute for the background knowledge and current information which repose in the supervisors.

It seems to me inadvisable to disregard this know-how by placing the responsibility for the approval or rejection of merger transactions on a department which has had little or no experience in the banking field.

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