CONTENTS Statement of Page Thomson, J. Cameron, president, Northwest Bancorporation, Minneapolis, Minn.. 143 245 Tyler Arthur B., vice president and counsel, National Shawmut Bank of Boston.__. Letters, statements, exhibits, etc., submitted for the record by Capehart, Homer E., a United States Senator from the State of Indiana: Opinion of Court of Appeals in case of Transamerica Corp. v. Federal Reserve System. 239 Grace, V. R., Co., New York, N. Y., W. F. Cogswell: Letter to Senator 237 Robertson, A. Willis, a United States Senator from the State of Virginia: Statement 253 Shawmut Association, W. E. Rich, secretary to the trustees: Statement.. 245 Thomson, J. Cameron, president, Northwest Bancorporation, Minneapolis, Minn.: Letter on holdings of Northwest Bancorporation stock by direc- 156 List of affiliated institutions, officers, and directors - 157 206 Statement, Northwest Bancorporation_ 207 Table, bank holding companies, banks and branches, 1933–52__ Woods, W. S., president, Trust Co. of Georgia Associates: Statement.. 228 235 257 251 III BANK HOLDING LEGISLATION TUESDAY, JULY 21, 1953 UNITED STATES SENATE, COMMITTEE ON BANKING AND CURRENCY, Washington, D. C. The committee met, pursuant to recess, at 10:05 a. m., in room 301, Senate Office Building, Senator Homer E. Capehart (chairman) presiding. Present: Senators Capehart, Bricker, Bennett, Bush, Payne, Frear, and Lehman. The CHAIRMAN. The committee will come to order. Our first witness this morning will be Mr. J. Cameron Thomson, president of the Northwest Bancorporation, Minneapolis. Mr. Thomson, suppose you proceed in your own way. STATEMENT OF J. CAMERON THOMSON, PRESIDENT, NORTHWEST BANCORPORATION, MINNEAPOLIS, MINN. Mr. THOMSON. Senator, first I suppose for the record I have got to state my name. I am J. Cameron Thomson; I am president of the Northwest Bancorporation, Minneapolis, Minn. I was made vice president and general manager of the corporation in June 1929 and president in 1933, and I have been since that time its president and chief executive officer. I understood that you would have liked to have had an expression from the holding companies generally, and so I would like to first read a short statement that is signed by 14 of the principal bank holding companies. I have the signed copies here from each one of them, except one, and I have a letter authorizing their signature. This statement represents about 72 percent of the banking officers represented by holding companies, and about 62 percent of the resources of the bank holding companies that are included in the Federal Reserve statement that they submitted to you, and it covers holding companies who have affiliates in Arizona, California, Idaho, Illinois, Iowa, Georgia, Kentucky, Ohio, Massachusetts, Missouri, New York, New Hampshire, Minnesota, Montana, Nebraska, North Dakota, Nevada, Oregon, Utah, Wyoming, Tennessee, Washington, South Dakota, and Wisconsin. The statement is short, so I would like to read it as it is. The undersigned companies have joined in this statement to put before the committee in succinct form a common position on pending proposals for further regulation of bank holding companies. Many of these companies desire at the appropriate time to present their views to the committee in order to emphasize points of particular interest to them. And I believe there are 10 of these 14 companies that will either appear in person or submit statements for the record. All of the undersigned companies are agreed that there is no necessity for additional regulatory legislation affecting bank holding companies. Notwithstanding this lack of necessity, however, some of the undersigned would be disposed to accept legislation, if reasonable, in the interest of bringing this matter to a close. In the past, no important regulatory legislation has been enacted in any field of business without a compelling public demand and concrete proof of an urgent need requiring congressional intervention. There is public acceptance of the view that Federal intervention in business should be minimized. It is especially significant, therefore, that nothing has been shown to justify congressional action. Even the supervisory officials themselves, after many years of study, appear to recognize no urgency, and can point to no immediate need. The committee has requested an expression of the views of bank holding companies on the various regulatory bills which have been proposed before the committee. Therefore, notwithstanding our view that no legislation is necessary, we shall, in a spirit of cooperation, proceed to a discussion of this matter. Each of the three bills before this committee contains proposals which we believe would be unsound, and in their present form, none is acceptable to us. For convenience, the principal features will be discussed in connection with the committee print. The proposal contained in this committee print has at least three major features: definition of holding companies; restrictions on acquisitions; and compulsory divestment requirements. Since all of the undersigned companies appear to come within the definition of bank holding companies, no general comment is presently required as to the first feature. The restrictions on acquisition raise a number of questions. First, in addition to the conventional standards applied to banks by supervisory authorities, the print contains in section 3 (b) (5) new concepts not found in existing Federal regulation of any business. These concepts, stated in novel terms which will require judicial interpretation appear to condemn size as such and to curb normal and natural growth. Again in section 3 (c), acquisitions may be approved subject to "such conditions" as the agency "may deem necessary." These conditions are not limited in any way except by the broadly stated general factors. They may apparently be prescribed merely as of the date of acquisition or for the future. They may be continuing and perpetual. Thus, in these two respects at least, the print would give a free hand to the agency in dealing with acquisitions without providing the basic safeguards of opportunity for hearing of any kind and of court review in the event of adverse action by the agency. A second objection to the acquisition provision is that express limitations are imposed in section 3 (d) upon the integrity of the dual banking system. That system is based upon autonomy of State authority as to State banks and similar autonomy of Federal authority as to national banks. Yet the print would permit a State by its own legisla tion to exercise a power of control over national banks to the extent of determining who are to be the shareholders of national banks. Congress did recognize State laws with respect to the location of branches of national banks. However, that action constituted a liberalization of the former prohibition against branches of national banks and was adopted by the Congress to aid national banks in competing on equal terms with State banks which were permitted to have branches. There are no comparable competitive advantages or disadvantages to a bank being owned by a holding company or having a different form of stock ownership since the size, lending resources and loan limits of a holding company-owned bank are determined by the individual bank's own capital structure and deposits and are unrelated to and unaffected by the resources of other banks in the same holding company system. This type of legislation would not aid national banks but on the contrary might well be detrimental to them. In addition to these basic objections, the bill fails to expressly permit a bank holding company to supply services to its affiliates, and also fails to permit a bank holding company to acquire minority shares in banks already controlled without prior approval. The third feature, that requiring divestment of nonbank holdings, is one of vital importance to a number of the undersigned. Others of the undersigned have operated exclusively as bank holding companies and have thus shown, as a matter of their policy and practice, that they believe they can operate most effectively in that manner. However, all of the undersigned feel that further consideration should be given to this subject by the committee. No situation where any abuse arises out of such ownership has been demonstrated in the hearings. It is entirely possible, in our opinion, that investments other than bank stocks, properly safeguarded, might afford a bank holding company an effective diversified secondary reserve. Therefore, we feel that the extreme step of requiring divestment should not be taken without a thorough study of this subject which demonstrates the need for such legislation. A number of the companies will present facts in these hearings in opposition to the divestiture proposal. The term "holding company" has been much abused in the hearings before this committee. It will be a purpose of the undersigned companies in making their individual statements to the committee to demonstrate the various respects in which their activities have developed and maintained a sound banking system, have stimulated fair competition in the field of banking, and have contributed to the public interest within their respective areas. This statement is signed by the BancOhio Corp., Columbus, Ohio, by James R. Coppins, the president. Mr. Biehm, vice president, is here in the room. The Baystate Corp., by Mr. Philip Eiseman as president, and he is here in the room. The Citizens & Southern Holding Co., of Atlanta, Ga., by Hugh W Fraser, the treasurer. I haven't seen Mr. Fraser yet. First Security Corp., Ogden, Utah, by George S. Eccles General Contract Corp., of St. Louis, by Arthur A. president. Marine Bancorporation, Seattle, Wash., by H. L. 1 president. Marine Midland Corporation, Buffalo, New York, by Maull, executive vice president. |