I would stack this record, I think, against any commercial firm of liquidators or receivers in the United States.

I might also add that not all expenses of liquidation, are charged against an insolvent bank. The Corporation provides free of charge the administration costs and expenses of the Washington staff and travel and subsistence expenses of field liquidation staff.

I would also like to add that Director Randall and I have an agreement, when a bank closes, one or the other of us is on the scene immediately. We are on the scene to see that the depositors are paid as quickly as possible.

In California, last week, we worked out an arrangement so that a bank was closed on Friday, Mr. Randall was there Friday night, and Monday morning the depositors had complete access to their money in a branch of another bank in California. There were no checks returned, they were not held up 1 day in getting their money.

This was the most successful experience we have had to date. Our function is not only to insure the deposits of these banks, but to make sure there is a way of paying bills in the United States. Our function is not only to pay off depositors, but to make sure that in any community, when a bank fails, funds are available as quickly as possible and to everyone who has money in the failed bank.

We have reduced it to 1 day. I don't know if we can do that frequently, but our average has been under 5 so far this year.

The CHAIRMAN. Mr. Camp, would you like to make a brief comment on Mr. Barr's statement?

Mr. CAMP. Yes, sir; I would like to speak to the question of whether legislation is needed as far as the national banks are concerned.

Now, I want to stress here that we have had this regulation, almost in its entirety, in operation since December of 1962. It is working very well for us. We have not been questioned on it and nobody has refused information where required. We feel that it has worked very well for us and we do not feel that it is necessary that the national banks be included in the bill.

As far as the State banks are concerned, if they so desire, it can possibly be done by regulation at that level.

The CHAIRMAN. Mr. Barr, you stated, I believe, 400-some-odd banks had resources of $635 million.

Mr. BARR. Right.

The CHAIRMAN. From what period of time, 1934 up to now? Mr. BARR. Since the creation of the Corporation in 1934, Mr. Chairman. These were the closed banks during that period.

The CHAIRMAN. I am amazed that the amounts are so small. If, in liquidation the Corporation recovered $350 million out of $380 million, I just wonder whether or not they were actually broke. If they are a going concern they could certainly overcome $350 million out of $380 million.

Mr. BARR. That is a very good question. In these early days, I dont think many banks were actually broke; not many businesses were broke in the long run. They were broke at this juncture of history. We took the assets, held on to them as long as 10 and 15 years and over this span of time the assets recovered their value as we worked out of the business cycle. So, whether they were broke or not, it was a question of not being able to pay depositors at the time. The CHAIRMAN. Mr. Kilburn?

Mr. KILBURN. I just wanted to comment on what you said. I think he is dead right. I know some country banks that were closed then and they paid out not only 100 percent, but they had money left over for their stockholders. At that particular time they were broke.

Mr. BARR. They couldn't meet the demands of the depositors for immediate funds.

The CHAIRMAN. That is one of the reasons that the number of banks, 31,000, 40 years ago, have been reduced to 14,000 now, I

assume.

Mr. BARR. That is correct.

The CHAIRMAN. During the greatest prosperity of any country on earth in those 40 years, the number went from 31,000 to 14,000.

Mr. BARR. If you were relating it to the business cycle you would think so.

The CHAIRMAN. I do not know whether it is connected with this proposal or not, but if my information is correct, there are a lot of banks now, some pretty good sized banks that are selling their shortterm securities and going into the more lucrative long-term market; is that correct?

Mr. BARR. Yes, sir.

The CHAIRMAN. Are any of the banks approaching distress or in danger?

Mr. BARR. In four out of the five cases this year this was the pattern that was followed. They seemed to be bringing in short-term money often at what seems to us to be high cost. They were paying in excess of the 4 percent interest rate that currently is permissible under regulation Q and regulation 329. They would pay bonuses to money brokers or other people for these funds. Sometimes the money was costing them as much as 6 percent and it was difficult for them to find an adequate, safe, and secure place to make good loans. Consequently, they took on many risky loans in an attempt to make a profit on this 6-percent money and in at least four out of five institutions, this was one of the major causes of the failure of the bank. The CHAIRMAN. I want to ask you about one other thing. This committee will be concerned, commencing tomorrow, when we take up the housing bill on the floor of the House of Representatives, with an amendment to the Senate bill which permits the national banks to make 30-year mortgage loans.

Does that appeal to you as being a desirable proposal at this time or an undesirable proposal?

Mr. BARR. Mr. Chairman, we reported on this provision specifically. The Senate proposal is that national banks be permitted to make 30-year, 80-percent loans. We came up with an alternative proposal, stating that all insured banks, State nonmember, State member, and national banks should be permitted to make 25-year, 75-percent loans. The CHAIRMAN. How much of an increase over the present law is that?

Mr. BARR. There is no present Federal law applicable to State banks in this area, Mr. Chairman.

The CHAIRMAN. I thought there was a 60-percent provision.
Mr. BARR. There is no general rule in the States.

The CHAIRMAN. Mr. Camp, would you like to comment on that?

Mr. CAMP. As Mr. Barr pointed out, that is our bill. We are in favor of that.

The CHAIRMAN. You are in favor of it?

Mr. CAMP. Yes, sir; 80 percent, 30 years.

The CHAIRMAN. The only reason I dislike it is that it gets the baks out of the business they were organized for and away from thehome market. I will not pursue the matter.

Mr. HANNA. Mr. Chairman.

The CHAIRMAN. Mr. Hanna?

Mr. HANNA. Mr. Chairman, may I ask for a point of clarification? You referred to five bank failures. Could we, for the record here have an indication that those five banks which-are State member banks and which are State nonmember?

Mr. BARR. The only national bank was the bank in Marlin, Tex. The other four were State nonmember banks.

Mr. HANNA. Thank you.

The CHAIRMAN. I have used my 5 minutes. Mr. Kilburn?
Mr. KILBURN. Thank you, Mr. Chairman.

Mr. Camp, I have listened to your statement and I have great admiration for Mr. Saxon. It seems to me that that sentence that you object to about the reports requirements doesn't amount to much. All these banks have to do is tell the FDIC there is a change of ownership. The American Bankers Association, I think, endorses this bill. I do not think they would if there were a lot of voluminous reports. Mr. Barr said there are different interpretations of the law. He has his responsibilities just the same as Mr. Saxon has and I think his request is reasonable. I think this is a good bill. I do'not see any objection to it and I do not think that Mr. Saxon's objections that it is not needed is valid because they think they do. Why should they not have it? That is what I do not understand.

Mr. CAMP. Mr. Kilburn, our basic objection here is that FDIC is not a regulatory body, its function is that of insurance and we feel that this could be the first step in the centralization of possible future powers in the FDIC.

Mr. KILBURN. I do not get that argument, either. They are not trying to regulate banks. They are trying to protect themselves. I do not blame them.

Mr. ASHLEY. Will the gentleman yield?

Mr. KILBURN. Yes.

Mr. ASHLEY. When we go for an insurance policy we have to have a medical examination, do we not?

Mr. CAMP. May I speak to that question? We give them a medical examination, so to speak-a quite thorough one, I think. I think that in the case of Marlin, Tex., as Mr. Barr has mentioned as being the only national bank presently in the category we are discussing, think Mr. Barr will agree that he was properly notified at all stages there, as to the statutes and he very kindly sent us a letter to that effect; is that not correct, Mr. Barr?

Mr. KILBURN. That is all I have.

The CHAIRMAN. Mr. Barrett?

Mr. BARRETT. One short question, Mr. Chairman.

Mr. Camp, on page 3, you state there is no urgent need for immediate action on this bill by the Congress. I was wondering if you

could tell us whether the depositors in these five receiverships sustained any loss?

Mr. CAMP. Sir, at this point, I could not answer that question. Mr. Barr would be more fully informed on it. I do not believe in any of those cases that the receiverships have been finally terminated. Mr. BARRETT. There have been no losses whatsoever to date?

Mr. CAMP. I could not say that. I say the receiverships at this point in all cases have not been finally terminated. They are still in the process of liquidation. Is that correct?

Mr. BARR. Yes, I have some preliminary figures, Mr. Chairman. We have had, in addition to these five failures, Mr. Barrett, two failures last year. I will read them to you. We have lumped all seven failures, the two failures last year and the five failures this year, together and have come up with a very tentative estimate involving all the banks-not any one particular bank. The total amount of assets involved in these seven banks is $36,302,000. Our preliminary estimate of loss, not on a bank-by-bank basis, but on an aggregate, is about $21⁄2 million. This is the amount which we think the Corporation will suffer as a loss.

Mr. BARRETT. Thank you.

Mr. Camp, since you are so well acquainted with the currency of the United States, I want to ask this question off the record. We will be dealing with silver tomorrow and the day after. We have the question as to whether or not it is a violation to deface the currency of the United States. I have been in front of the cashiers' booth in banks and in the post office where the cashiers said, "We are not permitted to take mutilated money."

To your knowledge, is it a violation to deface the currency of the United States, whether it is hard or soft money, meaning paper, gold, or silver? What alternative does one have to get good money when he is paid in mutilated paper money, other than writing to the Treasury and requesting new currency?

Mr. CAMP. Mr. Barrett, if I may, I am not a lawyer and I would like, with your permission to refer this to Mr. Robert Bloom, our chief counsel. I will say from observation, having been a bank examiner for a number of years, I have seen a great deal of mutilated money in the banks and I don't think it is a general policy of banks not to accept mutilated money, per se. As a matter of fact, they generally set it aside for shipment separately, and I don't think, if I went to the bank with a corner torn off a dollar bill that they would refuse to take it.

Mr. BARRETT. I agree with you. I think this would be up to the discretion of the cashiers. But I would like to know whether the defacing of currency is a violation and if there is anything on the statute books indicating that it is. The lawyer probably could tell and if he can we would like to get a statement from him.

The CHAIRMAN. Mr. Barrett, would it be satisfactory for him to file a statement for the record?

Mr. BARRETT. I think we ought to get it.

Mr. CAMP. We will do that.

(The information referred to follows:)

Hon. WRIGHT PATMAN,

House of Representatives,

Chairman, Committee on Banking and Currency,
Longworth House Office Building, Washington, D.C.

DEAR MR. CHAIRMAN: At today's hearing on H.R. 12267, Congressman William A. Barrett requested this Office to furnish him with a copy of the applicable Federal statute relating to mutilation of coins and currency.

Attached hereto is a copy of the requested provisions of the United States Code.

Sincerely,

WILLIAM B. CAMP,

Acting Comptroller of the Currency.

CHAPTER 17-COINS AND CURRENCY

§ 331. Mutilation, diminution and falsification of coins

Whoever fraudulently alters, defaces, mutilates, impairs, diminishes, falsifies, scales,, or lightens any of the coins coined at the mints of the United States, or any foreign coins which are by law made current or are in actual use or circulation as money within the United States; or

Whoever fraudulently possesses, passes, utters, publishes, or sells, or attempts to pass, utter, publish, or sell, or brings into the United States, any such coin, knowing the same to be altered, defaced, mutilated, impaired, diminished, falsified, scaled, or lightened—

Shall be fined not more than $2,000 or imprisoned not more than five years, or both. As amended July 16, 1951, c. 226, § 1, 65 Stat. 121.

1951 Amendment. Act July 16, 1951, amended section to make it applicable to minor coins (5-cent and 1-cent pieces), and to fraudulent alteration of coins.

Index to Notes

"By law made current" 2 Punching and mutilating 1 Purpose 1⁄2

2. Purpose

In enacting this section forbidding fraudulent alteration, defacement and other acts on foreign coins by law made current, the congressional intent was to protect foreign coins which at the time were legal tender in the United States. Tyson v. U.S., C.A.Okl.1960, 285 F. 2d 19.

2. "By law made current"

Where Mexican Cinco Centavo (5 cents) coins had not been made current in United States by United States law, the possession of fraudulently altered Centavo coins was not a violation of this section which in effect forbids fraudulent alteration, defacement and other acts on foreign coins by law of Congress made current in United States. Tyson v. U.S., C.A.Okl. 1960, 285 F. 2d 19.

In this section forbidding fraudulent alteration, defacement and other acts on foreign coins "by law madecurrent", the quoted words mean by law of Congress made current in United States; the 1951 amendment did not change this meaning. Id.

Reference to persons causing or procuring was omitted as unnecessary in view of definition of "principal" in section 2 of this title.

Changes were also made in phraseology. 80th Congress House Report No. 304.

Canal Zone. Applicability of section to Canal Zone, see section 14 of this title.

Where a coin regularly coined at the mint was afterwards punched and mutilated, and an appreciable amount of silver removed from it, and the hole plugged up with base metal, or with any substance other than silver, it was an act of counterfeiting; but otherwise where the hole was punched with a sharp instrument, leaving all the silver in the coin, though crowding it into a different shape. U.S. v. Lissner, C.C. Mass. 1882, 12 F. 840.

§ 332. Debasement of coins: alteration of official scales, or embezzlement of metals

If any of the gold or silver coins struck or coined at any of the mints of the United States shall be debased, or made worse as to the proportion of fine gold or fine silver therein contained, or shall be of less weight or value than the same ought to be, pursuant to law, or if any of the scales or weights used at any of the mints or assay offices of the United States shall be defaced, altered, increased, or