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Mr. KEATING. The banking community no doubt cites the Comptroller of the Currency, doesn't it?

Mr. BROWNELL. I suppose that a certain element of them do because there is I am sure some feeling there that they would rather deal just with one agency. But as I come in my statement a little further along here to say, I think we could work out a joint arrangement there so that the two agencies could work in harmony, but our goal would be the interpretation of one effective standard of antitrust enforcement, and that is the standard that is in section 7 of the Clayton Act, which has been on the books now for some time.

People are beginning to understand it and work within it, and it seems most unfortunate to introduce a new uninterpreted standard which would apply only to the banking mergers and not to nonbanking mergers.

Mr. KEATING. You have undoubtedly endeavored to negotiate with the Comptroller of the Currency in an effort to find a meeting of the minds between you?

Mr. BROWNELL. Yes, we have, and we are certainly agreed on the objective that is to be accomplished here. It is only a question of means, and the means that we propose would be that there be just the one standard, and that either the Department of Justice alone, which is the major agency of the Government heretofore which has interpreted these antitrust standards should be the one to pass on it, or if it is deemed more desirable to have the banking agencies at least initially pass on them, let them consult with the Department of Justice and together apply the single standard of section 7 of the Clayton Act.

The CHAIRMAN. I might say to the gentleman from New York that the Independent Bankers Association is in favor of H. R. 2143, also the State supervisory agencies have indicated that they much prefer 2143 than provisions of the Senate so-called omnibus bank bill, because that latter bill would take away a good deal of their supervisory jurisdiction over State banks so that segment of the banking fraternity, I think, would be favorably disposed toward legislation embodied in the bill before us this morning.

Mr. KEATING. Is it the intention to call some of the members of the banking community to testify?

The CHAIRMAN. Yes.

Mr. BROWNELL. If I may interpolate, I think that there is some danger during the current session that they will try to compartmentalize these things too much, let the Banking Committee pass on the banking problems, let the Judiciary Committee pass on merger problems.

Now it is just commonsense that those two come together at some point, and I hope very much that there can be a community of interests and cooperation between the two committees so that this problem will be studied as a whole.

I am very glad that you are going to get some testimony from the banking community here so that you can see the overall picture and work out with the Banking Committee an overall solution to it. There is a danger that this committee, which has a primary responsibility for seeing that the antitrust laws are effective and clear, might do its job and yet find that unknowingly some other committee in the Con

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would be very unfortunate to have new terminology used without any indication, in the legislative history or otherwise, that the Congress considers it exactly the same in effect and substance as the Clayton Act, section 7.

Mr. KEATING. There is a distinction in kind between banking and say the cloak and suit business.

Banking seems to be somewhat more tinged with the public interest. Mr. BROWNELL. That is right; and that is why it is subject to regulation in certain aspects. I do not say that those other considerations should not be taken into account by the banking agencies when it comes to pass upon a merger or upon an acquisition. But I say that insofar as the antitrust part of this is concerned, the maintenance of effective competition in the area, that that factor should be the same as the factor and standard applying to the rest of industry.

Mr. McCULLOCH. Mr. Chairman, I would like to ask the Attorney General this question: Then if you have come to a firm conclusion that the standards should be the same with respect to prospective mergers

Mr. BROWNELL. Yes.

Mr. McCULLOCH (continuing). Are you at all fearful that those rigid standards may prevent needed mergers at banks in cities, or areas, or communities too small to support a banking institution, which areas and which communities in my opinion now exist?

Mr. BROWNELL. I am not fearful of that, for several reasons. One, I am about to come to in my statement, and that is the question of failing banks. I do not think that there would be any need to worry about that.

Mr. McCULLOCH. I would agree with that.

Mr. BROWNELL. So far as the small communities are concerned, the final decision in any event in the banking area would be left to the appropriate banking agency. And they could take into consideration the special banking considerations which should be involved. For example, the consideration of the question of whether there is sufficient services there and sufficient assets.

All those things would still be taken into consideration before the final decision was made by the banking agency.

Mr. McCULLOCH. And even though there would be a substantial reduction in competition, that would not prevent the merger in your opinion, if the other factors

Mr. BROWNELL. If the other factors outweight it in the opinion of the appropriate banking agency.

Mr. KEATING. How do you reach that conclusion?

Is there something in section 7 which would give warrant to that, or is it found somewhere else?

Mr. BROWNELL. It would be in the omnibus banking bill.

Mr. KEATING. In other words, even though it did substantially lessen competition, if there were other factors which made the acquisition desirable in order to give the proper service to a small community

Mr. BROWNELL. As a net proposition, yes.

Mr. KEATING (Continuing). Would you be able under the omnibus banking bill to permit the merger?

Mr. BROWNELL. That is right, but on the one factor of competition or substantial lessening of competition in which this committee

gress had recommended a bill which would impinge very severely on the work which this committee is doing, without your hardly realizing it.

Mr. KEATING. We run into that all the time, Mr. Attorney General. Mr. BROWNELL. I suppose so.

Mr. KEATING. We may have as much difficulty reconciling our views with the Banking Committee as you and the Comptroller have had difficulty.

Mr. BROWNELL. If you can meet that standard of cooperation, I think it will solve this one.

Mr. RODINO. You say, Mr. Attorney General, that there would be at least a period of uncertainty as to the interpretation of lessening of competition unduly; isn't that so!

Mr. BROWNELL. Yes.

Mr. RODINO. Could it be possible that the "substantially" phraseology might result in more effective control than the word "unduly” as eventually interpreted?

Mr. BROWNELL. Reading the hearings before the Senate Banking and Currency Committee on this, discussions that I have seen of it, I believe that it is the intention that putting that word "unduly" in there would mean that fewer proposed mergers would be affected by it. I think it is a weakening of the antitrust standard.

Mr. RODINO. That is your present thinking?

Mr. BROWNELL. Yes.

Mr. KEATING. But in section 7, don't we have the word "substantial"?

Mr. BROWNELL. Yes.

Mr. KEATING. And that is left out, so that there might be some contention certainly that any lessening of competition which was undue would not have to be substantial in order to fall under the ban of this section?

Mr. BROWNELL. It is going to be very troublesome, I think.

Mr. RODINO. Then to pursue that further, Mr. Attorney General, if that were the case-and of course we are dealing with hypotheses right now would you then object to the use of the "undue" terminology if it would result in more effective and stringent control?

Mr. BROWNELL. I think there is such a slight chance of that happening that it would be hardly worth our time to consider it. The whole tenor of the testimony that has been given in support of it indicates to me that a strong effort would be made to say that that is a weakening of the present standard.

I think that the main thing is uniformity. I think it would be a mistake to have two separate standards, whatever they are. For as I understand it, it is the purpose of this subcommittee and the purpose of the Congress that there shall be competition in the banking field that is just as stringent, no more, no less, than that in industry generally.

In other words, it is not comparable to the railroads or something of that sort, where in return for monopoly powers they are given exemption from the antitrust laws. But as I understand it, the expression of opinion of Congress, at least up to this time, is that the standards of competition in the banking industry shall be no different than they are in industry generally. If that is true, then I think it

would be very unfortunate to have new terminology used without any indication, in the legislative history or otherwise, that the Congress considers it exactly the same in effect and substance as the Clayton Act, section 7.

Mr. KEATING. There is a distinction in kind between banking and say the cloak and suit business.

Banking seems to be somewhat more tinged with the public interest. Mr. BROWNELL. That is right; and that is why it is subject to regulation in certain aspects. I do not say that those other considerations should not be taken into account by the banking agencies when it comes to pass upon a merger or upon an acquisition. But I say that insofar as the antitrust part of this is concerned, the maintenance of effective competition in the area, that that factor should be the same as the factor and standard applying to the rest of industry.

Mr. McCULLOCH. Mr. Chairman, I would like to ask the Attorney General this question: Then if you have come to a firm conclusion that the standards should be the same with respect to prospective mergers

Mr. BROWNELL. Yes.

Mr. McCULLOCH (continuing). Are you at all fearful that those rigid standards may prevent needed mergers at banks in cities, or areas, or communities too small to support a banking institution, which areas and which communities in my opinion now exist?

Mr. BROWNELL. I am not fearful of that, for several reasons. One, I am about to come to in my statement, and that is the question of failing banks. I do not think that there would be any need to worry about that.

Mr. McCULLOCH. I would agree with that.

Mr. BROWNELL. So far as the small communities are concerned, the final decision in any event in the banking area would be left to the appropriate banking agency. And they could take into consideration the special banking considerations which should be involved. For example, the consideration of the question of whether there is sufficient services there and sufficient assets.

All those things would still be taken into consideration before the final decision was made by the banking agency.

Mr. McCULLOCH. And even though there would be a substantial reduction in competition, that would not prevent the merger in your opinion, if the other factors

Mr. BROWNELL. If the other factors outweight it in the opinion of the appropriate banking agency.

Mr. KEATING. How do you reach that conclusion?

Is there something in section 7 which would give warrant to that, or is it found somewhere else?

Mr. BROWNELL. It would be in the omnibus banking bill.

Mr. KEATING. In other words, even though it did substantially lessen competition, if there were other factors which made the acquisition desirable in order to give the proper service to a small community

Mr. BROWNELL. As a net proposition, yes.

Mr. KEATING (Continuing). Would you be able under the omnibus. banking bill to permit the merger?

Mr. BROWNELL. That is right, but on the one factor of competition or substantial lessening of competition in which this committee

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