and (b) in the event of a vacancy in the office of the Chairman of the Board of Directors of the FDIC, and pending appointment of his successor, the Comptroller of the Currency shall act as Chairman. Our research, although not exhaustive, does not reveal in the legislative history of Federal deposit insurance the reason for placing the Comptroller of the Currency on the Board of Directors of the FDIC. We are advised that there are no published records of the House or Senate hearings on the Banking Act of 1933; and, although there were extensive hearings by the congressional banking committees on the Banking Act of 1935, we have been unable to find any information therein in this regard. That act continued the membership of the Comptroller of the Currency on the Board of Directors, and there was apparently no issue or controversy in respect thereto. Although there is no published record of the congressional committees' hearings on the Banking Act of 1933, there is such a record of the hearings in 1932 before the subcommittee of the Committee on Banking and Currency of the House on H. R. (10241) 11362, which was a bill to amend the National Banking Act and the Federal Reserve Act, and to provide a guaranty fund for depositors in banks and for other purposes, which bill, in effect, was the predecessor of the Banking Act of 1933. However, that record is also silent as to the reason for placing the Comptroller of the Currency on the Board of Directors of the FDIC. Title 2 of that bill provided for the creation of a guaranty fund for the protection of depositors in banks. Section 201 of that title provided for the establishment of a Board to be known as the Federal Liquidating Board, to consist of the Secretary of the Treasury, the Comptroller of the Currency, and three members to be appointed by the President, by and with the consent of the Senate. Section 203 of the bill provided that when a bank is found to be insolvent or has been closed by order of the Comptroller of the Currency, the Comptroller of the Currency shall certify the fact to said Board, which Board shall then proceed to take over and wind up the affairs of such bank. The Board was given the same powers and duties as applied to the Comptroller in such cases. This bill is more fully discussed in the attached memorandum of the legislative history of the FDIC, prepared by the Legal Division of this Corporation. Although the legislative history is silent on the reason for placing the Comptroller of the Currency on the Board of Directors of the FDIC, the fact that the Board was to act as a liquidating board of national banks closed by order of the Comptroller of the Currency may have been a factor considered by the committee in making this requirement. Furthermore, at the time this proposed legislation was considered by the committee, the Secretary of the Treasury and the Comptroller of the Currency were ex officio members of the Federal Reserve Board. (They continued as members of that Board until February 1, 1936 (sec. 241, title 12, U. S. C.).) The requirement, that the Comptroller of the Currency be both a member of the Federal Reserve Board and the Board of Directors of the FDIC, may have been for the purpose of coordinating the policies and practices of the three Federal banking agencies. I trust that this information will be of some assistance to you and your committee. With personal regards, I am, Sincerely yours, H. E. Cook, Chairman. DUTIES AND FUNCTIONS OF THE FEDERAL HOME LOAN BANK BOARD (Supplied by Bureau of the Budget) With respect to Federal home-loan banks Determines and readjusts limits of Federal home-loan bank districts. Establishes in a designated city within each district a Federal homeloan bank. Requires organization certificate of each Federal home-loan bank. Appoints four directors of each Federal home-loan bank. Prescribes rules and regulations for election of other bank directors. May increase number of elective bank directors. Designates bank chairmen and vice chairmen. Approves amount of compensation of bank directors. Approves exercise of corporate powers by each bank. Approves selection, employment, and compensation sonnel, and may suspend or remove such personnel. Determines, with approval of Secretary of the Treasury, minimum capital of each bank, which shall be not less than $5 million. of bank per Determines price at which capital stock of each bank shall be sold. May call, in whole or in part, the stock subscriptions made by the Secretary of the Treasury in any bank. May require stock held by the Secretary of the Treasury in any bank to be paid off at par at any time. Prescribes rules and regulations under which banks may borrow, give security therefor, pay interest thereon, and issue debentures, bonds, and other obligations. May issue consolidated bank debentures and bonds. May require banks to deposit additional collateral and may adjust equities between banks. Prescribes terms under which banks may accept deposits. May require banks to rediscount the discounted notes of members held by other banks, and to make loans to, or deposits with, other banks. Regulates investment of surplus assets and reserves of banks. Approves payment of dividends by banks. Levies semiannual assessment on banks to pay estimated Board expenses. At least twice annually, examines each bank and requires banks to furnish periodic statements. May liquidate or reorganize any bank. With respect to members of Federal home-loan banks and nonmember borrowers Determines whether an otherwise qualified home mortgage loan institution shall be eligible to become a member of, or a nonmember borrower of a Federal home-loan bank on the basis of its financial condition, the character of its management, and its home-financing policy. Adjusts amount of stock held by each member institution in its bank. Prescribes amount of cash and obligations of the United States which must be held by a member of a bank before such member shall make or purchase any loans, and may prescribe different amounts for different classes of member institutions. Approves disposal of stock by one member to another member. Examines State laws and procedures governing institutions eligible to become members or nonmember borrowers and governing land titles and mortgagee and homestead rights, and, if such laws and procedures are inadequate, the Board may limit bank operations in such States. May establish such examinations as are necessary of member institutions and nonmember borrowers in any State where State laws are not adequate. Determines conditions under which nonmember borrowers may secure advances from Federal home-loan banks. May require examination and reports of examinations by other authorities of any institution seeking an advance from a bank. Approves action of any bank denying an application for an advance. Prescribes regulations, restrictions, and limitations on advances to member institutions. Prescribes manner in which borrowing institution shall certify the value of real estate with respect to which it gave a home mortgage loan. Approves or determines rates of interest and other terms for paying off advances made to members and nonmember borrowers. Approves sale of advances by one bank to another or participation by one bank in the advances of another. May, after hearing, remove any member from membership or deprive any nonmember borrower of the privilege of obtaining further advances because of failure to comply with law or Board regulations, insolvency, or management inconsistent with sound and economic home financing. With respect to Federal savings and loan associations Prescribe rules and regulations for the organization, incorporation, examination, operation, and regulation of associations to be known as Federal savings and loan associations, and issues charters therefor. Regulates deposits which associations may receive and certificates of indebtedness which they may issue. Issues charters only to persons of good character and if there is a need for such an association in the community to be served. May request Secretary of the Treasury to purchase preferred shares and full paid income shares in such associations where necessary, approve action by associations to call for such shares, and request associations to repurchase such shares. Prescribe rules and regulations for conversion of member institutions into Federal savings and loan associations, and the conversion of a Federal association into a State institution. Notifies chartered associations of alleged violations of law and Board regulations, conducts hearings thereon in accordance with the Administrative Procedure Act, and takes appropriate action on the basis of findings. Created pursuant to Reorganization Plan No. 3 of 1947 and made an independ- FEDERAL HOME LOAN BANK BOARD NEW FEDERAL SAVINGS AND LOAN ASSOCIATIONS Summary of basic operational procedure in processing applications to organize new Federal associations CHART A.-STEPS LEADING TO PERMISSION TO ORGANIZE 1. Filing of application and supporting data with district bank. 2. Transmittal of application f with bank recommendation. drecommendation of Division of Federal department for preparation of Board resoluendation. Returned to Division of Federal ommendation to Federal Savings rence. Returned, to Division of commendation to Federal Home |