Within a few months-I believe it is a few months after I arrived, the national cash desk and the national operations wanted me to handle that function. I looked at the function of writing these 50 checks every day, of taking the telephone calls of handling this, and the way I looked at it initially was one of: How can I perform this function in the-in a method where it cost-it would be the easiest for the firm to do at the least expense? When this function was going to come over from the national, they were not going to give me any additional people who were doing it over there, which they said, "It is a region function; hire whatever staff you need, and put it on your budget." I said I have a number of branches outside of the Atlantic region-where in the afternoon the cashiers are not that busy, where they could write three checks-and there would be no need to hire any additional personnel to do this. At the same time, in these branches, one of the things I was concerned about is that I would not want to put any check in a bank where it took them more than 1 day to collect the funds. Mr. HUGHES. Mr. Jensen, you have effectively utilized my 5 minutes and more and not answered the question. But we will be back-my time has expired-I can assure you. The gentleman from Ohio. Mr. FEIGHAN. Thank you, Mr. Chairman. Mr. Jensen, perhaps you can help me in understanding the role that you played, and some of your colleagues did, in executing some of the cash management practices of E.F. Hutton that have been coming under scrutiny by the Justice Department and ourselves and colleagues in your industry. Perhaps we can focus on some of the concerns that I have as a Representative from Ohio and some of the banks from our State affected. I understand that in this statement of 2,000 counts of indictment against E.F. Hutton, almost 150 of the counts refer to banks in Ohio, most of which are in my community; and that it was with respect to overdrafts of almost $120 million. I would like, if I could, to hand you a copy-if someone from the staff would do this for me-I would like to hand you a copy of what Mr. HUGHES. Would the gentleman identify the document? Mr. FEIGHAN. I would like, Mr. Chairman, if I could, to submit for the record a document that is entitled-a "Checking Account Statement" from the National City Bank of Cleveland. Mr. HUGHES. Without objection, it will be admitted into the record. [The information follows:] Mr. FEIGHAN. I would appreciate it, Mr. Jensen, if you could tell us what the balance statement is on this checking account statement of E.F. Hutton at the National City Bank of Cleveland, what the balance statement is as of September 30, 1981. Mr. JENSEN. We had deposits of $325,000, with a balance of $677,000. Mr. FEIGHAN. A balance of- Mr. JENSEN. $672,000, it looks like. Mr. FEIGHAN. A balance of $672,000. That is the balance that National City felt that they had in that account on September 30. Can you tell me-I don't really understand why this reconciliation statement would be sent to New York rather than to an E.F. Hutton branch which would originate the checks. Could you explain that for us? Mr. JENSEN. I believe I can. All of the cancelled checks and statements-banks are notified when an account is opened to send on our main accounting department in New York. The accounting department, what they do is they do a bank reconciliation monthly on every account. They want to ensure that all of the deposits that were on E.F. Hutton's books were made on the bank's books, and they want to ensure that all of the withdrawals that are on E.F. Hutton's books are on the bank's books. If this was done in the branch, it is like someone auditing themselves, and the national accounting department wants to do the audit. What they do after this is, as they find differences, a list is made up and forwarded to each branch, and a copy is sent to the region, and these items each have to be reconciled. There could be a mistake Mr. FEIGHAN. How would the branch then know to what extent its account had been drawn down? Mr. JENSEN. By looking at the-you mean-could you- Mr. FEIGHAN. If the branch does not receive the checking account statements, which I have just identified, and as was sent to the New York office- Mr. JENSEN. That is correct. Well, on a daily basis, as was discussed this morning, the drawdown is computed by a branch cashier via the drawdown sheet, and that is forwarded via wire or telephone to the various regional headquarters daily. So, you have a drawdown sheet that is prepared in the branch Mr. FEIGHAN. So the branch would have on a regular basis daily information on the status of that account if there were drawdowns against it? Mr. JENSEN. Yes. And-yes. Mr. FEIGHAN. That is fine, then. Let me present to you then another document. Mr. Chairman, I would ask that I be permitted to introduce into the record a document that is stated as a "Standard Bank Reconciliation Form" prepared by E.F. Hutton, dated September 30, 1981. Mr. HUGHES. Without objection, so ordered. [The information follows:] |