and in the interests of the States and communities. I think it is unfortunate that the other side of this picture isn't seen.

When one considers there were nearly 1,100 branch applications before that office-most of these are disposed of, there are 5 or 6 in litigation.

What is this, when one looks at it? One hears only of a handful of these cases.

Of all the merger cases before this office, how many are really in litigation? How many fraught with dispute?

It is minuscule.

I do not say it is not important, but it is minuscule.

In the chartering area similarly, I think it is rather astonishing. Mr. MULTER. Not a single decision you ever make that is good will ever make a headline.

Mr. SAXON. That is correct. I think this thing really goes very well indeed. I think the great problem, in my opinion, is to insure the best possible staff available-we have worked hard at this, evaluating salaries and doing all the other things necessary to assure maximum competence and efficiency.

I think we have a remarkable organization, one of the best I have ever seen certainly in the Government, or even out of it.

And, secondly, to assure maximum expedition in the disposition of matters. This is the fundamental evil in the process, as I see it. And if a decision is tough, as many of these are, a man has to be prepared on his own name to face the music, whatever it is.

And in these miniscule, numbers-wise, cases where there is serious conflict, you cannot get into answering each one—just sit and take it. I guess that is part of the burden of one of these posts.

Mr. HANNA. Mr. Chairman, if the situations are miniscule, they are certainly not de minimis, or they would not be in the courts. Mr. SAXON. I would think the difficulties are greatly exaggerated. Mr. ST GERMAIN. Mr. Chairman, following what the gentleman has just said, I think that the proceedings a few weeks ago and the examples we have been given to date by those people who are unhappy with the gentleman's office and the actions of the office-in all of these we see a repetition of five or six cases being cited constantly.

Under the circumstances, and in view of what the gentleman has just said, I wonder if he might supply for the record the number of charter applications, the number of branch applications and mergers: that were considered by the office, and as against these, those that are in litigation or drawnout dispute.

Mr. SAXON. I would be glad to, sir.

Mr. MULTER. It will be made a part of the record. (The information referred to follows:)

COMPTROLLER OF THE CURRENCY,

U.S. TREASURY, Washington, D.C., July 1, 1963.

Hon. ABRAHAM J. MULTER,
House of Representatives,

Washington, D.C.

DEAR MR. MULTER: In the course of my testimony before the Subcommittee on Bank Supervision and Insurance given on May 15, 1963, on H.R. 729 and H.R. 5874, we were asked to supply for the record a comparison of the total number of charter, branch, and merger applications processed by our office with the total number of such applications which became the subject of court

actions. In response to this request, we are pleased to submit the following figures which show the total number of applications processed in the year 1962 and the number of such applications which were involved in litigation:

JAMES J. SAXON, Comptroller of the Currency.

Mr. SAXON. One other point, sir. I affirmatively state to people at every proper opportunity, in every proper case, if they think that business organization, that bank, they have been adversely affected to a substantial degree by a decision of the office, they have perhaps even a duty to challenge the office, without any consideration of whether it is a national bank or not, without any consideration of possible affront to this office. If they think that their interest is, too substantively affected, they should do so.

In two merger cases-here are the opinions, if you feel the decision is erroneous, and you have been affected, take it to the courts.

Mr. MULTER. You have never raised the objection in a court proceeding that the court had no right to review your action?

Mr. SAXON. No, sir; absolutely not-in fact, encourage it. Even in branch cases. Besides-you mentioned the Bank Merger Act, Mr. Chairman.

One of the real difficulties here, as I see it, lies in the statute itself, perhaps, that didn't make clear, as it could have, the authority granted. Of all the merger cases, I think today there are five in the courts, and arising primarily out of interpretations of the statute. (The following letters are inserted at this point in the record :)

LAW OFFICES POGUE & NEAL,
Washington, D.C., May 17, 1963.

Hon. RICHARD T. HANNA,
Longworth House Office Building,
Washington, D.O.

DEAR MR. HANNA: As you were leaving the hearing room on Wednesday, I indicated some concern over the answer which the Comptroller had given to a question from Mr. Multer relating to judicial review. The specific question and answer relating to this matter appears at Tr. 637 and reads as follows:

"Mr. MULTER. You have never raised the objection in a court proceeding that the court had no right to review your action?

"Mr. SAXON. No, sir; absolutely not-in fact, encourage it. Even in branch

Our concern arises out of the position taken by the Department of Justice on behalf of the Comptroller in Saxon v. Bank of New Orleans and Trust Company et al. (No. 17681), presently pending before the Court of Appeals for the District of Columbia. As you will note at pages 22-23 and 25-31 of the attached brief filed only last month, the Comtroller challenged the standing of both the Bank of New Orleans and the Louisiana State bank supervisor to sue.

I have some difficulty with the Comtroller's position that he encourages judicial review when his attorneys are seeking to bar State banks from a suit on the ground of economic disadvantage, which is the only motivation which

they would have to bring a suit, and in seeking to bar the State bank supervisor from bringing a suit on the grounds that there is no invasion of any personal legal right.

You were good enough to suggest that I might submit a question on this matter which you might consider addressing to the Comptroller. Such a question is attached hereto.

Very truly yours,

JAMES F. BELL,

General Counsel, National Association of Supervisors of State Banks. The brief filed by the Department of Justice with the Court of Appeals for the District of Columbia Circuit in Savon v. Bank of New Orleans and Trust Company, et al., on behalf of the Comptroller of the Currency challenges the standing of State banks to sue the Comptroller on the ground of economic disadvantage, which is the only motivation a State bank would have to challenge an action of the Comptroller, and also challenges the right of the State bank supervisor to bring a suit against the Comptroller on the grounds that there is no invasion of any personal legal right. (See pp. 22-23 and 25-31 of brief for appellant, Comptroller of the Currency, No. 17681, April 1963.)

Can this position be reconciled with your testimony at Tr. 637 during the hearings on H.R. 729 and 5874 to the effect that you actually encourage judicial review of your actions?

COMPTROLLER OF THE CURRENCY,

U.S. TREASURY, Washington, D.C., May 27, 1963.

Hon. RICHARD T. HANNA,
House of Representatives,

Washington, D.C.

DEAR MR. HANNA: Thank you for your letter of May 20, 1963, offering to submit for the record an explanation and clarification of my answer to Mr. Multer on the question of the pleading of the attorneys in the Department of Justice, acting on my behalf, that the plaintiff banks in the Whitney National Bank litigation, lacked standing to sue.

That litigation involved the establishment and chartering of a national bank subsidiary of a bank holding company. Under the Bank Holding Company Act of 1956, a bank holding company must obtain the approval of the Federal Reserve Board in order to establish or acquire a subsidiary. Competitor banks which become parties to the Board's proceedings and are aggrieved by the Board's decision, have a right to obtain judicial review of that decision (12 U.S.C. 1848). If the competitor banks in the Whitney National Bank litigation had made use of the administrative remedies available to them before the Board, they would have had a right to judicial review, regardless of the "standing to sue" contention urged in the suit against me. Indeed, I am advised that the same banks which brought the action against me have also sought judicial review of the Board's decision by filing a proceeding against the Board in the Court of Appeals for the Fifth Circuit, under the Bank Holding Company Act.

Previous to my becoming Comptroller it had been the practice of the Department of Justice attorneys representing this office to assert the defense of lack of standing to sue. This practice was followed in preparing the papers filed in suits which were commenced against the office after I had assumed office. I did not have any personal knowledge that this defense, which was one of several contained in the pleadings, was being asserted on my behalf. It has always been, and still is, my personal feeling that any action of mine should be open to review in a proper court of competent jurisdiction by a bank or individual who feels that a legal error was committed by our office. This is not to say, of course, that decisions as to the economic and banking factors which have been committed to my discretion are subject to being overturned by the courts in the absence of legal error, abuse of discretion, or arbitrary action.

In the Whitney litigation, the defense of lack of standing was contained in the printed briefs. However, I requested the Department of Justice to inform the court of appeals that it was my personal wish that the case be decided on its merits. The Department of Justice attorney representing me so advised the court at the argument last Friday.

I regret any possible confusion which may have ensued in the minds of some because of my lack of direct information as to the technical defenses contained in the pleadings in laws suits involving the Office.

Thank you very much for your courtesy in offering to clarify the record on this point.

Sincerely,

JAMES J. SAXON, Comptroller of the Currency.

Mr. MULTER. Of course, we did make clear that we were not going to take from the Department of Justice its right to bring antitrust suits. At the same time now, I think we must give consideration to how we can do these things in such a way that if there is a decision that the Department of Justice doesn't like, before the merger is accomplished they can have the matter reviewed in court.

Mr. SAXON. I would far more rather see a stronger, firmer attitude on the part of the affected banks. We make no advance commitments today whatsoever.

But to see them, where they think it is wrong, take it up. This is a regulated business. And they ought not to approach any authority, certainly this office, with any degree of fear or weakness, but challenge it if they feel their interests are substantively affected.

I certainly would do so if I were on the outside. I wouldn't hesitate to do so.

Mr. MULTER. I can understand why you should not give an advance commitment.

But I think if you Office invites these people to come in and discuss it in advance, they won't spend a lot of time and money on useless applications.

Mr. SAXON. Pardon?

Mr. MULTER. While I don't expect your Office to give an advance commitment, you do encourage applicants to come in and discuss the matter in advance, so they don't waste a lot of time, energy, and

money.

Mr. SAXON. That is correct; we encourage them to inform us.

But we do not in any case, formally or informally, directly or indirectly, make any comment or commitment on the case-except as to procedure, handling matters. We help them in every way we can on that. We think this is a matter of management responsibility. Mr. MULTER. Maybe I have not made myself clear.

You do suggest to applicants who come before you they come in and discuss the matter on a regional level with your chief examiner in that area before they go further?

Mr. SAXON. Only as to the requirements to be met and matters such as the provision of supporting data, economic data, population data, and all the other considerations. And the procedures for handling it.

But in no other respects.

Mr. MULTER. Wouldn't your chief examiner volunteer the suggestion that, "You would be wasting your time, this area is overbanked"? Mr. SAXON. I would hope not. I would hope he would not make such a commitment in advance, directly or indirectly.

Mr. MULTER. I know the procedure under your predecessor was to discourage applications unless there was some chance of being granted, if they felt the area was overbanked.

For instance, in New York City, the State superintendent of banks doesn't hesitate to tell applicants for new charters, "Don't go into this area, it is overbanked."

And I know your predecessor did the same thing in various areas. He would discourage the filing if he felt an area was overbanked. Mr. SAXON. Well, I don't challenge or criticize others; but this is a group of citizens, and most of them I find quite careful. They are committing their own capital, and usually it is a substantial amount. Our capital requirements are very high, and ordinarily they are people of proven business and professional standing, who are not wont to shovel their money out the windows. I find ordinarily— stronger than ordinarily they have made pretty careful investigations themselves before they come in.

I hope that no examiner of our office is discouraging such a group. This is ultimately their right, on the basis of their investigation, to submit this. It is our duty to dispose of it. And on the basis of indirect commitment or comment of this sort that "You better no come in, you would have a tough time," I think this is deleterious to the opportunities that ought to be available in this business, whether in the branching area, the merger area, the bank holding company area, or any other area, or capital changes within a business, or other changes.

Many other areas beyond these have flown through our Office, as you know.

I don't think we should ever do that.

On the whole, people who come in are responsible people. We may ultimately say it will be overbanked, based on a very extensive investigation, comments, and all.

And it is too easy offhand to make a comment of this kind which could have a discouraging impact, whatever the activity is.

It took us 9 months to get this communicated to the national banks of the country: "Don't come in here expecting to shift the monkey to our banks, this is a management decision, and you are paid to make it. You submit what you think is appropriate and necessary to your community and your institutions. That is your right."

Now, maybe another policy is of benefit or merit, too. But in our concept of the way this trying to inculcate initiative and vitality and vigor into this system, and strength to the private decisionmaking process in this business, our view has been to the contrary.

We are the regulator and they are the business, and there ought to be maximum independence on the part of both.

Mr. MULTER. Mr. Bolton?

Mr. BOLTON. Mr. Chairman, I wonder if I could ask the witnesswe have been discussing banking pretty generally, sir.

What would be your definition of a commercial bank?

Mr. SAXON. Defined as a bank of deposit. An institution which receives deposits.

Mr. BOLTON. And would you feel that under the law, as it exists. now, there are real limitations upon what that commercial bank can do with its deposits in order to get a return for the depositors?

Mr. SAXON. Yes, sir.

Mr. BOLTON. And does the national law today prevent a bank from the ownew hip of securities other than certain specified securities, such

securities, et cetera!