OVERDRAFTS AND CORRESPONDENT BANKING PRACTICES

HEARINGS

BEFORE THE

COMMITTEE ON

BANKING, HOUSING, AND URBAN AFFAIRS UNITED STATES SENATE

NINETY-FIFTH CONGRESS

FIRST SESSION

ON

OVERSIGHT ON THE BANKING PRACTICES WHICH WERE THE
SUBJECT OF THE COMPTROLLER OF THE CURRENCY'S REPORT
ON THE FORMER HEAD OF THE OFFICE OF MANAGEMENT AND
BUDGET

COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

WILLIAM PROXMIRE, Wisconsin, Chairman

JOHN SPARKMAN, Alabama

HARRISON A. WILLIAMS, JR., New Jersey

THOMAS J. MCINTYRE, New Hampshire
ALAN CRANSTON, California
ADLAI E. STEVENSON, Illinois
ROBERT MORGAN, North Carolina
DONALD W. RIEGLE, JR., Michigan
PAUL S. SARBANES, Maryland

EDWARD W. BROOKE, Massachusetts
JOHN TOWER, Texas

JAKE GARN, Utah

H. JOHN HEINZ III, Pennsylvania
RICHARD G. LUGAR, Indiana
HARRISON SCHMITT, New Mexico

KENNETH A. MCLEAN, Staff Director
JEREMIAH S. BUCKLEY, Minority Staff Director
CHARLES L. MARINACCIO, Special Counsel

CONTENTS

LIST OF WITNESSES

MONDAY, SEPTEMBER 26

John Heimann, Comptroller of the Currency...

George LeMaistre, Chairman, Federal Deposit Insurance Corporation..

Stephen S. Gardner, Vice Chairman, Federal Reserve Board..

TUESDAY, SEPTEMBER 27

John F. McGillicuddy, president, Manufacturers Hanover Trust..

Edward R. Palmer, chairman, executive committee, Citibank.

Donald C. Platten, chairman, Chemical Bank.....

Richard L. Thomas, president, First National Bank of Chicago-

Roy A. Schotland, Georgetown Law School.

Page

14

46

195

354

360

364

367

414

462

William Bowen, professor, Stonier School of Banking, Rutgers University;

and president, Commercial National Bank, Little Rock, Ark.

Manferd Peterson, associate professor of finance, University of Nebraska..

WEDNESDAY, SEPTEMBER 28

John R. Evans, Commissioner, Securities and Exchange Commission,

accompanied by Richard H. Rowe, Director, and Linda L. Griggs, staff

attorney, Division of Corporation Finance.

Raymond D. Campbell, president, Oberlin Savings Bank, Oberlin, Ohio;

and Donald M. Carlson, president, Elmhurst National Bank, Elmhurst,

Ill.; representing Independent Bankers Association..

W. Liddon McPeters, president, Security Bank, Corinth, Miss.: accom-

panied by Willis W. Alexander, executive vice president, ABA; repre-

senting American Bankers Association...

472

497

629

646

ADDITIONAL. STATEMENTS AND DATA

American Bankers Association:

Press release: Loose Business Practices Not Typical of Nation's

Banks..

671

Reprint from booklet on legal responsibilities.

673

Study on correspondent banking by John S. Clark, director, Correspond-
ent Banking Division..

662

425

Brief critique of GAO study of Federal banking examination, suggesting
lines for congressional oversight focus, attached to statement of Profes-
sor Schotland.

"Conflict of Interest and the Financing of Commercial Bank Stock Owner-

ship," paper submitted by Manferd O. Peterson, financial economist and

Hugh S. McLaughlin, research assistant, Federal Deposit Insurance

Corporation....

Comptroller of the Currency:

Answers to questions of Senator Proxmire received prior to the hearing-

Cease and desist provisions of the Financial Institutions Supervisory

Act of 1966, 12 United States Code, section 1818(b), 1971 to

present...

Letter from John G. Heimann explaining actions taken in response
to Justice Department's letter of September 1970-

Memorandum to Federal Reserve Board from Robert J. Herrmann,

Director, Domestic Group Bank Operations Division.