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always or frequently waived overdraft fees for their own customers more

often than they did for insiders of other banks and much more often than they

did for public officials. State-by-state comparisons indicated that waiver

policies did not appear to correspond to state branching laws. Furthermore,

there were no discernible differences in fee waiver policies in one section of

the country as opposed to another.

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By separate letter, I have invited you to testify in hearings on bank regulation to be held by the Committee on September 26, 27 and 28. As a follow-up to those hearings the Committee would like a more precise and comprehensive report on the magnitude and scope of certain banking practices on the part of all insured commercial banks. Preliminary discussions on the content of this report have already been held between the staffs of the bank regulatory agencies and the Committee staff.

It is my understanding that as a result of these discussions, the FDIC, in consultation with the Federal Reserve Board and the Comptroller of the Currency, will survey all insured commercial banks to obtain the information needed by the Committee. Accordingly, I would like to see the following information included in your survey of each insured bank: 1. The amount of each bank stock loan outstanding

as of Dec. 31, 1976 where the total shares
pledged under all loans by the reporting bank
equals or exceeds 10 percent of the total shares

issued by the bank whose stock is pledged;.
2. The name and position of the borrower;
3. The rate of interest charged on each reported

bank stock loan and the number and percent of
shares pledged;

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7.

8.

The name and location of each reporting bank
together with its supervisory status (national,
state-member, or state non-member);
The total amount of credit outstanding as of
June 30, 1977 to officers, directors and major
shareholders of other banks, the portion
accounted for by banks maintaining a corres.
pondent account with the reporting bank, and
the average annual percentage rate for the total
and for the portion accounted for by corres.
pondent bank's.

9. The total amount of credit outstanding as of

June 30, 1977 and the average annual percentage
rate with respect to loans to:

Officers of the reporting bank and to their business interests as defined under Sec. 103 of s. 71;

b. Major shareholders in the reporting bank

(not reported under (a)) or their business interests as defined under Sec. 103 of s. 71;

C.

Directors of the reporting bank (not reported under (a) or (b)) and to their business interests as defined under Sec. 103 of s. 71.

In addition, I understand the FDIC will undertake a separate study of overdraft loans based on a representa• tive sample of insured commercial banks. This study will make it possible to estimate the total average amount of free overdraft credit outstanding at all insured commercial . banks during a representative period of time. In addition, the study will identify the recipients of free overdraft credit and what fraction of the total is extended to certain categories of customers including: 1. Officers, directors, employees and major share

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holders of the reporting bank; 2. Officers, directors, employees and major share

holders of correspondent banks;
3. Officers, directors, employees and major share-

holders of other banks;
Officers, directors, employees and major share-
holders of corporations that do a substantial

amount of business with the reporting bank;
5. Certain occupational categories including public

officials and attorneys.

4.

I understand the results of both studies can be furnished to the Committee by December 1, 1977. I would appreciate your keeping the Committee staff informed of the progress of these studies and of any problems encountered.

Thank you for your cooperation in providing this information

Sincerely,

lliam Brokonr Chairman

CC:

Comptroller of the Currency
Chairman of the Board of Governors

of the Federal Reserve

APPENDIX B

FEDERAL DEPOSIT INSURANCE CORPORATION

OFFICE OF THE COMPTROLLER OF THE CURRENCY

BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM

October 28, 1977

TO: THE CHIEF EXECUTIVE OF EACH INSURED COMMERCIAL BANK

The Senate Committee on Banking, Housing and Urban Affairs is currently considering the need for further legislation with respect to bank stock loans, insider lans and overdrafts. In order to have meaningful information on which to base its deliberations, the Committee has requested the Federal Deposit Insurance Corporation, in cooperation with the other Federal banking agencies, to survey all insured commercial banks. The survey results will also be made available to the House Committee on Banking, Finance and Urban Affairs.

To provide the information requested by Congress and to aid in the discharge of their supervisory responsibilities, the Board of Directors of the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System and the Comptroller of the Currency are jointly calling for a special report from all insured commercial banks. The agencies have made the report mandatory, under applicable statutes, for banks under their supervisory jurisdiction.

The Federal Deposit Insurance Corporation, acting for the three agencies, is responsible for the transmittal of the report form to all insured commercial banks and for the collection of the returns. A copy of the report is enclosed.

The report has four schedules. Schedule I calls for information on loans secured by bank or bank holding company stock; Schedule Il calls for information on loans to executive officers, major stockholders and directors of other banks; Schedule III calls for information on loans to executive officers, major stockholders and directors of the reporting bank; and Schedule IV calls for information on overdrafts.

Aggregate information derived from the bank responses will be transmitted to the Committees. The individual bank returns will be regarded as strictly confidential by the agencies. If it should be determined that disclosure of any bank returns must be made, the banks concerned will be notified in advance of any such disclosure.

We recognize that responding to this survey may be difficult for some banks. Although some of the information should be available from accounting or computer records, other information will be available only from documents in loan files and, in certain instances, recourse to other sources may be required. However, it is essential that the information provided be as complete and accurate as practicable. It is also essential that the results be made available promptly to Congress; therefore, it has been necessary to impose a tight time schedule. The completed questionnaires should be returned to the Washington office of the FDIC within 30 days of receipt of this letter.

Effective November 4, 1977, the following toll free number in the Washington Office of the FDIC is available for banks in the continental United States (with the exception of the District of Columbia) to call for information and assistance in completing or correcting the schedules: 800-424-9514

Banks outside of the continental United States may call collect at 202-389-4500 before 7:00 PM Eastern Standard Time. Banks in the District of Columbia may call 389-4500.

Your cooperation and understanding in this important undertaking will be greatly appreciated.

Federal Deposit Insurance Corporation

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Jala C. trine

Board of Governors of the Federal Reserve System

Office of the Comptroller of the Currency

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