BANKING ACT OF 1935 THURSDAY, FEBRUARY 21, 1935 HOUSE OF REPRESENTATIVES, COMMITTEE ON BANKING AND CURRENCY, Washington, D. C. The committee met at 10:30 a. m., Hon. Henry B. Steagall (chairman) presiding. The CHAIRMAN. Gentlemen, the committee will come to order, please. I have asked Mr. Crowley, of the Federal Deposit Insurance Corporation, to come before us this morning and discuss H. R. 5357. I assume that he desires to address his remarks mainly to the provisions of title I of the bill, which relates to the Federal Deposit Insurance Corporation. I am going to desist from making any preliminary statement myself at this time, but if I have the opportunity, I should like to incorporate in the hearings a short preliminary statement of my own. In deference to a suggestion which Mr. Crowley has made to me, and what I think might be in the interest of time and orderly procedure, I am going to suggest to the committee that they permit Mr. Crowley to make his statement and complete his discussion in a general way before committeemen interrogate him. You may proceed, Mr. Crowley, if you will. STATEMENT OF LEO T. CROWLEY, CHAIRMAN OF THE BOARD, FEDERAL DEPOSIT INSURANCE CORPORATION Mr. CROWLEY. Gentlemen, we have prepared a digest of this bill, together with our recommendations. If it is agreeable to the committee we will pass to each one of you a copy of our report, in order that you may follow the report with me. If you will be kind enough to let us follow through with it and answer your qestions afterward, we would like to do that. We have a number of charts that we would like to present to you. Is that agreeable to you, Mr. Steagall? The CHAIRMAN. Yes; that will be perfectly all right. Mr. CROWLEY. Gentlemen, last year I appeared before you and recommended that the provisions of the so-called "permanent insurance plan" be suspended for another year, and that the temporary insurance fund be continued to July 1, 1935. At that time it was stated that we need additional experience before the permanent plan went into effect. We also suggested that, through the adminis 1 tration of the temporary fund, we might gain some knowledge which would indicate desirable changes in the permanent plan. You have asked me to appear before you today to discuss with you the results of our 13 months' experience and study and to explain the reasons behind the proposals which you have before you, and which comprise title I of the Banking Act of 1935. With your permission, I would like to outline to you in detail the reasons which have motivated our suggestions for changes in the permanent insurance plan. The charts and tables give a vivid picture of the commercial banking structure of the United States. These data cover all insured and noninsured banks, arranged according to total deposit liability size groupings. They do not include mutual savings banks or private banks. Ninety percent by number of all of the licensed commercial banks in the United States have been admitted to the insurance fund. Over 98 percent of the total deposits in commercial banks and trust companies in the United States are in banks, the deposits of which are insured. On October 1, 1934, there were only about 1.100 licensed commercial banks, with deposits of slightly more than $500,000.000, which were not insured, while insured commercial banks numbered more than 14,000 on that date, and their deposits amounted to some $36,000,000,000. Mutual savings banks have been excluded from these figures. There are 68 of the 576 mutual savings banks in the fund for mutuals. We have in our fund 1.928 banks with deposits of $100,000 and under; of banks with deposits of $100,000 to $250,000 we have 3,929; with deposits of $250,000 to $500,000 we have 3,278; with deposits of $500 000 to $750,000, we have 1.531; with deposits of $750,000 to $1,000,000 we have 970; with deposits of $1,000,000 to $2,000,000 we have 1.664; with deposits of $2,000,000 to $5,000,000 we have 1,076; with deposits of $5,000,000 to $50,000,000 we have 647; with deposits of $50,000,000 and over we have 96 banks in our fund." The banks are broken down in our chart into national banks, State banks, and State member banks, and the insured and uninsured nonmember banks. For instance, out of 1,091 banks that are outside of the fund, 426 of those have deposits of $100,000 and under, 349 have deposits of $100,000 to $250,000. 169 have deposits of $250,000 to $500.000, 54 have deposits of $500,000 to $750.000, 27 have deposits of $750,000 to $1,000,000, 34 have deposits of $2,000,000 to $5,000,000, 16 have deposits of $5,000,000 to $50,000,000, and 16 banks have deposits of $50,000,000 and over, which make a total of 1,091 banks. The CHAIRMAN. Does your statement disclose the total of the deposits in each of these groups? Mr. CROWLEY. Yes, sir. The next chart that you have there shows that the banks with deposits of $100,000 and under have a total deposit liability of $123,831,000. In other words, 1,900 banks have deposits of $123,831,000. The banks with deposits of $100,000 to $250,000 have total deposits of $664.493,000, and so on down. The $50,000,000 banks, and over, have deposits of $18,942,000,000. |