but on close questions I have seen the Board disagree with the recommendations on several occasions. Mr. HERZ. In your judgment, Mr. Coburn, and based on your experience with the Corporation, would there be any great hazard in a situation in which instead of a three-man board disagreeing with these committees, a single administrator should disagree with them? Mr. COBURN. You have placed me in a very embarrassing position. Frankly, I am going to say I like a three-man board. Mr. HERZ. Would you wish to place in the record, inasmuch as this question probably will be dealt with time and time again, a statement of the nature of the work which is done by the Board which is not first reviewed and placed before the Board by a committee of the Corporation? Mr. COBURN. Yes; I will be glad to prepare it. For instance, let me give you just one instance that probably is a matter that would not be reviewed by committee. I think Governor Robertson was talking about this matter of interest regulations. Ordinarily that would be a matter that would not go to committee. We have considered it several times and it would not be a matter for committee. There are a number of matters of that kind which are pure policy matters, which might well not be submitted to committee before going to a board for discussion. (The following was received with reference to the above:) FEDERAL DEPOSIT INSURANCE CORPORATION, Hon. A. WILLIS ROBERTSON, United States Senate, Washington, D. C. MY DEAR SENATOR: During the hearings, Mr. Herz of the Advisory Committee requested a memorandum discussing the nature of the work which is done by the Board of Directors of the Corporation which is not reviewed and placed before the Board by a committee. This poses a difficult problem, but I shall endeavor to outline actions and functions of the Board falling in the general category mentioned in this inquiry, with an overall purpose of providing you with information that will permit an evaluation of the functions of a 3-man Board of Directors as compared with an Administrator. During the last 3 years the Board has taken formal action on the following matters without having them submitted to a committee for prior screening. 1. All actions in reference to the maintenance of the deposit insurance fund, including the purchase and sale of securities. 2. Personnel actions, including appointments, promotions and resignations, and other actions relating to personnel policy. 3. Actions relating to the welfare of Corporation personnel, including hospitalization, group life insurance, charity fund, health activities, FDIC Club activities, etc. 4. Actions authorizing expenditures in connection with conferences and meetings of various types, some involving only Corporation personnel, and others involving representatives of State banking authorities, including actions concerned with the Corporation's educational program and the preparation, printing and distribution of informational material. 5. Actions affecting relations with State and Federal supervisory agencies, and particularly actions aimed at coordinating policies. 6. Actions on the manning table, including amendments thereof from time to time. 7. Actions relating to the Corporation's security and relocation programs. 8. Actions concerning the promulgation of rules and regulations and amendments thereto, and bylaws and amendments thereto. 9. Actions relating to the budget. 10. Actions relating to the employment of counsel to represent the Corporation in legal matters. 11. Actions on leases and contracts. 12. Actions on vouchers and purchase orders. 13. Actions with respect to policy as to assessments. 14. Consideration and discussion of oral and written reports and memoranda from division chiefs, particularly memoranda concerning problem banks. The foregoing catalog of Board actions does not truly reflect the discussions and deliberations of the Board informally in the formulation of policy which underlies certain specific actions. For example, the Board has rejected a branch application (submitted with favorable recommendation by the committee) for the underlying reason developed through its discussion that its policy should be opposed to mobile banking units or banking units located in privately owned stores or other places of private business. To elaborate further, our records show that during the last 10 months 373 memoranda were distributed to each of the Directors concerning the status of problem banks. In some instances the memoranda led to formal action by the Board. It is a customary procedure for division chiefs and other staff members to discuss problems and policies informally with members of the Board in order to formulate recommendations that are subsequently submitted for formal action by the Board. For instance, for my own part I have frequent conferences with Mr. Cook and with Mr. Harl. Not infrequently I call Mr. Gidney on the phone or visit his office to discuss problems concerning the affairs of the Corporation. Other division chiefs, particularly the Chief of the Division of Examination, discuss problems with the members of the Board which lead to and affect recommendations made to the Board. Giving some indication of the functions of the Corporation and its personnel is the further fact that in the last 10 months the Board took action on 524 formal applications submitted by banks. In many instances these applications and the problems presented thereby have been discussed informally with Board members prior to the preparation of the memoranda by the Division of Examination. Frequently proponents or bank representatives visit our offices and confer with members of the Board and the staff concerning their proposals or problems. By the normal, informal exchanges that result from these conferences, policies and actions are initiated and frequently determined. I trust that the foregoing information will be of some assistance to you in your deliberations. Sincerely yours, ROYAL L. COBURN, General Counsel. Mr. HERZ. Do I understand you correctly that when the Board makes a decision as to how it shall interpret the provisions of law concerning interest, it does not seek the advice of the staff? Mr. COBURN. No, I do not mean that at all. I mean it is discussed, but it is not screened in this process that I have outlined. Mr. HERZ. Is it screened in another process? Mr. COBURN. Yes. For instance, at the Board meetings, except when it goes into executive sessions, which is most infrequent, the staff members are present and do participate in the meetings of the Board. Mr. HERZ. Are there any matters on which the Board acts in which it does not have the advice of its staff members in one form or anotherin policy determinations, for example? Mr. COBURN. I doubt if there are any matters that there is not some discussion with the staff about it. I doubt if there are any matters the Board acts upon without some discussion with the staff. None occur to me. Mr. HERZ. Would you not say, Mr. Coburn, so far as matters of policy are concerned, that for the most part with respect to those they are pretty well spelled out in the legislation in detail? Mr. COBURN. No. There are a lot of policy decisions they will make such as the matter of interest. It happens to occur to me because it had been a matter of prior discussion. There are a lot of policy matters that require Board action. Mr. HERZ. Thank you very much. Senator ROBERTSON. In connection with policy questions just asked by Mr. Herz, the Federal Reserve Board reports directly to the Senate Banking and Currency Committee on audits of the Board and of the Federal Reserve banks. We brought out yesterday that we recently received one of those reports and it was filed. When you get the reports of National bank examiners and State bank examiners, are they filed or, if not, who examines them and when does the Board consider policy questions on them? Mr. COBURN. I think somebody else than I had better answer that. Mr. GREENSIDES. Senator, the reports of examinations from the Comptroller of the Currency which are sent to us are assigned to the Review Section which has charge of that particular State or area of the country. The report is reviewed. The statistical data is taken which we need. The report is analyzed, and the results are carried forward on our reporting process. Then the report of examination itself is returned to the Comptroller of the Currency, but we have the data and the information concerning the bank. If perchance there should be any significant developments within the bank which warrant more concern, then a memorandum is prepared and circulated to the Board. This latter procedure applies to all banks and not just the national banks. Senator ROBERTSON. There are 5,000 reports twice a year and you have to examine them all? Mr. GREENSIDES. The Comptroller of the Currency supplies only one report a year. We do not receive copies of both examinations, although we may. If we are particularly concerned with the bank we will ask for the second report. Senator ROBERTSON. How many State banks, Mr. Greensides, have no insurance? Mr. GREENSIDES. Approximately 850 banks, I believe. Senator ROBERTSON. Will you submit for the record the names and addresses of those banks? Mr. GREENSIDES. Of the uninsured banks? Senator ROBERTSON. Yes. Mr. GREENSIDES. Yes, we can. Senator ROBERTSON. How many mutual banks have no insurance whatever? Mr. GREENSIDES. That is included in the 800. believe. Senator ROBERTSON. Then let us break it down. banks and how many mutual banks? Mr. GREENSIDES. There are State banks also. There are 329, I How many State Senator ROBERTSON. Will you say how many State banks? Senator ROBERTSON. Commercial banks. Mr. GREENSIDES. Commercial banks will be around 500, and there will be 300 and some mutual savings banks. Senator ROBERTSON. That total of over 800 has no insurance from any source? Mr. GREENSIDES. The mutual savings banks in Massachusetts and Connecticut have their own insurance fund. Senator ROBERTSON. But I asked you those that did not have any. Mr. GREENSIDES. That did not have any insurance would be around 500. Senator ROBERTSON. How many mutual banks have no insurance? Mr. GREENSIDES. There would be a few in Maine, I believe. I would have to check that for you. Senator ROBERTSON. Do the mutual banks that have State insurance have adequate insurance? Mr. GREENSIDES. I would hardly be prepared to answer that question. Senator ROBERTSON. When you put in the record the statement of the State banks that have no insurance, I would like you to list the mutual banks that have no insurance and then the mutual banks that you do not think have adequate insurance and explain why it is not adequate, so that we can see just where the situation stands. (The following was received for the record. The list referred to will be found in the appendix, p. 428 :) Hon. A. WILLIS ROBERTSON, FEDERAL DEPOSIT INSURANCE CORPORATION, Committee on Banking and Currency, OFFICE OF THE CHAIRMAN, Washington, November 13, 1956. United States Senate, Washington, D. C. DEAR SENATOR ROBERTSON: At your request I am transmitting herewith a list of banks not insured by the Federal Deposit Insurance Corporation. This list was last compiled by our Division of Research and Statistics as of June 30, 1956, but changes which occurred during the following 4 months have been entered, thus making the list accurate as of October 31, 1956. The banks and trust companies on this list are classified as follows: All other, including those operating under general banking laws__ 319 There are several features of the enclosed list which I should like to draw to your attention. All offices of operating noninsured banks are shown, rather than only the head offices. However, each branch office is clearly distinguished from the head office in the case of a bank operating one or more branches, The banks are grouped according to type: Commercial banks, mutual savings banks, and trust companies not engaged in deposit banking. Commercial banks are further described to distinguish those operating under general banking laws from other types of commercial banks, such as private banks. The list therefore contains at least two groups of banks which are not presently eligible for deposit insurance, namely, trust companies not engaged in deposit banking and private banks. In several of the States, mutual savings banks not insured by this Corporation are nevertheless participants in other deposit insurance systems. This is true in Massachusetts, where all of the mutual savings banks not participating in Federal deposit insurance are participants in the Mutual Savings Central Fund, Inc., and in Connecticut, where all but one of these banks are members of the Savings Banks' Deposit Guaranty Fund of Connecticut, Inc. There are 5 mutual savings banks in Connecticut which are insured by this Corporation, and 1 in Massachusetts. I might note in connection with the single Massachusetts bank that its deposits are insured by this Corporation up to the insurance maximum for each depositor, and beyond that by the Massachusetts Fund. I trust that this information will be of assistance and that you will not hesitate to call upon us if we can be of further help. Sincerely yours, H. E. Cook, Chairman. Mr. GREENSIDES. I would like to add, Senator, that the Legislature of Massachusetts during the past year passed enabling legislation, and it does appear that several mutual banks of Massachusetts will be coming into the Federal Deposit Insurance Corporation fund during the course of next year. Senator ROBERTSON. How about the big savings banks in New York? Mr. GREENSIDES. They are all insured. Senator ROBERTSON. All insured? Mr. GREENSIDES. Yes. Senator ROBERTSON. I understand we have 13,439 banks that are insured? Mr. GREENSIDES. Yes, sir. Senator ROBERTSON. And the Supreme Court has held whenever a bank voluntarily comes into your control program they submit to the jurisdiction of the Federal Government? Mr. GREENSIDES. Yes, sir. Senator ROBERTSON. And Congress has the right to legislate concerning them? Mr. GREENSIDES. Yes, sir. Mr. HARRIS. As a person from Connecticut with some knowledge of that situation, I would like to suggest if you desire information about the Connecticut mutual savings banks insurance it can be had from Hartford from the Mutual Savings Banks Deposit Guaranty Fund, and I will make it my business to have that organization supply this committee with information about its fund, if you desire it. Senator ROBERTSON. Of course, we would like to have it. I would like to get this record printed, though, as soon as it can be, because it has to be distributed in your committee, which is going to meet early in December to formulate its recommendations, and we cannot hold this record up for additional things. Mr. HARRIS. Something could be submitted within a week. Senator ROBERTSON. If it gets to us in time to put it in. If not we cannot put it in the public hearings. Mr. HARRIS. Yes. (The information referred to follows:) THE SAVINGS BANKS' DEPOSIT GUARANTY FUND OF CONNECTICUT, INC., Senator A. WILLIS ROBERTSON, Acting Chairman, Senate Committee on Banking and Currency, Senate Office Building, Washington, D. C. DEAR SENATOR ROBERTSON: Mr. Reece H. Harris, Jr., member of the Advisory Committee, has discussed with me a statement regarding our Connecticut Guaranty Fund, which he made at a meeting of your committee on Friday, November 9, 1956. He indicated that you might wish to make some reference to our Connecticut fund in the hearing record and has suggested therefore that I send you certain information regarding our fund's origin and operations. He felt that it would |