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HOUSE COMMITTEE ON BANKING, FINANCE AND URBAN AFFAIRS

HENRY S. REUSS, Wisconsin, Chairman THOMAS L. ASHLEY, Ohio

J. WILLIAM STANTON, Ohio WILLIAM S. MOORHEAD, Pennsylvania GARRY BROWN, Michigan FERNAND J. ST GERMAIN, Rhode Island CHALMERS P. WYLIE, Ohio HENRY B. GONZALEZ, Texas

JOHN H. ROUSSELOT, California JOSEPH G. MINISH, New Jersey

STEWART B. MCKINNEY, Connecticut FRANK ANNUNZIO, Illinois

GEORGE HANSEN, Idaho JAMES M. HANLEY, New York

HENRY J. HYDE, Illinois PARREN J. MITCHELL, Maryland

RICHARD KELLY, Florida WALTER E. FAUNTROY,

CHARLES E. GRASSLEY, Iowa District of Columbia

MILLICENT FENWICK, New Jersey STEPHEN L. NEAL, North Carolina

JIM LEACH, Iowa JERRY M. PATTERSON, California

NEWTON I. STEERS, JR., Maryland JAMES J. BLANCHARD, Michigan

THOMAS B. EVANS, JR., Delaware CARROLL HUBBARD, JR., Kentucky

BRUCE F. CAPUTO, New York JOHN J. LAFALCE, New York

HAROLD C. HOLLENBECK, New Jersey GLADYS NOON SPELLMAN, Maryland LES AUCOIN, Oregon PAUL E. TSONGAS, Massachusetts BUTLER DERRICK, South Carolina MARK W. HANNAFORD, California DAVID W. EVANS, Indiana CLIFFORD ALLEN, Tennessee NORMAN E. D'AMOURS, New Hampshire STANLEY N. LUNDINE, New York HERMAN BADILLO, New York EDWARD W. PATTISON, New York JOHN J. CAVANAUGH, Nebraska MARY ROSE OAKAR, Ohio JIM MATTOX, Texas BRUCE F. VENTO, Minnesota DOUG BARNARD, Georgia WES WATKINS, Oklahoma

PAUL NELSON, Clerk and Staff Director
MICHAEL P. FLAHERTY, Counsel

GRASTY CREWS II, Counsel
MERCER L. JACKSON, Minority Staff Director
GRAHAM T. NORTHUP, Deputy Minority Staff Director

SUBCOMMITTEE ON FINANCIAL INSTITUTIONS SUPERVISION, REGULATION AND INSURANCE

FERNAND J. ST GERMAIN, Rhode Island, Chairman FRANK ANNUNZIO, Ilinois

JOHN H. ROUSSELOT, California JAMES M. HANLEY, New York

CHALMERS P. WYLIE, Ohio CARROLL HUBBARD, JR., Kentucky

GARRY BROWN, Michigan JERRY M. PATTERSON, California

HENRY J. HYDE, Illinois BUTLER DERRICK, South Carolina

GEORGE HANSEN, Idaho
THOMAS L. ASHLEY, Ohio

JIM LEACH, Iowa
NORMAN E. D'AMOURS, New Hampshire
JOHN J. LAFALCE, New York
CLIFFORD ALLEN, Tennessee
JOHN J. CAVANAUGH, Nebraska
MARY ROSE OAKAR, Ohio
JIM MATTOX, Texas

RICHARD L. STILL, Subcommittee Staff Director

(II)

CONTENTS

945

945

436

975

632

Hearings held on-

September 6, 1977 (afternoon)..

September 14, 1977

TESTIMONY OF

Bloom, Hon. Robert, First Deputy Comptroller of the Currency

Cleveland, King, director, National Bank of Georgia, Atlanta.

Davis, James A., Regional Director, Chicago Region, Federal Deposit Insurance

Corporation

Davis, John E., president, Calhoun First National Bank, Calhoun, Ga............

Guyton, Robert, president, National Bank of Georgia, Atlanta.

Henderson, Y. Atkins, Jr., chairman, Calhoun First National Bank, Calhoun,

Ga.......

Pickett, Charles M., Regional Counsel, Dallas Region, Federal Deposit Insur-

ance Corporation

Tarleton, Donald L., Regional Administrator, Office of the Comptroller of the

Currency, Atlanta, Ga.; accompanied by Dennis G. Linder, Counsel, Civil

Division, Department of Justice.

Thompson, Quinton, Regional Director, Dallas Region, Federal Deposit Insur-
ance Corporation

ADDITIONAL INFORMATION SUBMITTED FOR THE RECORD
LaFalce, Hon. John J., Response from the Office of the Comptroller of the

Currency regarding "Elements necessary for successful prosecution of over-

draft cases as misapplication"
Leach, Hon. Jim, Georgia, State of, statute on overdrafts
Rousselot, Hon. John X.:

Correspondence With Witnesses

Letter to Robert Bloom, dated September 12 and response dated September

22

Letter to Calhoun First National Bank, dated September 12 and response

dated September 19

Letter dated September 12 to National Bank of Georgia and response dated

October 6...
Letter dated September 12 to Donald Tarleton and response dated Septem-
ber 26 ....

Newspaper Articles Submitted

"Bert Lance's Banking Game: The President Knows How To Play It, Too"

from the Los Angeles Times, September 1, 1977

St Germain, Chairman Fernand J.:

Correspondence With Witnesses

Letter to King D. Cleveland, National Bank of Georgia, dated September

20, partial response dated September 30, partial response dated October

6, and complete response dated October 13

Including nolo contendere pleas entered January 1976 by:

National Bank of Georgia

King David Cleveland

James Hill Dickson, Jr
Letter to James Davis, FDIC, Chicago, dated September 26 and response

dated October 4....

Letter to John E. Davis, Calhoun First National Bank, dated September 20,

and response of September 26

Including stockholders of record:

As of December 10, 1974.

As of July 2, 1975...

As of August 13, 1976...

As of April 30, 1977

And Annual Reports of:

1976..

1975.

640

636

629

630
631

1000

Page

389

439

983

939

745

874

809

780 786

647

777

703

793

St Germain, Chairman Fernand J.:--Continued
Correspondence With Witnesses-Continued
Letter from Robert Guyton, president, National Bank of Georgia, dated

September 8 in response to questioning on Citizens and Southern Nation

al Bank Letter to Y. A. Henderson, Calhoun First National Bank, dated September

20 and response dated September 29
Letter to Quinton Thompson, FDIC, Dallas, dated September 23 and

response of September 29, with additional response of Charles Pickett,
dated September 30 .....

Inquiries to Correspondent Banks
Letter to the Bank of Commerce, New York City, dated September 20 and

response of October 25
Letter to Chemical Bank, dated September 20 and response of September

28.. Letter to the Citizens and Southern National Bank, Atlanta, dated Septem

ber 20 and response dated October 28... Letter to the Continental Illinois National Bank, Chicago, dated September

20 and response dated October 21.
Letter to the First National Bank of Chicago, dated September 20 and
response dated October 25.....

Including summary of collateral
Letter to the Fulton National Bank, dated September 20 and response

dated October 3........
Letter to the Manufacturers Hanover Trust Co., dated September 20 and

response dated September 29 Letter to the United American Bank, Knoxville, dated September 20 and

response dated October 5..
Letter to the United American Bank, Nashville, dated September 20 and
response dated November 7

Affidavits of
Balamut, George B., Esq., Simpson, Thatcher and Bartlett, dated August 8,

1977.
Brougham, Robert, district head, Manufacturers Hanover Trust Co., dated

August 8, 1977
Dickson, James Hill, Jr., former senior vice president, National Bank of

Georgia, dated August 10, 1977
Gerwin, Thomas, vice president, Manufacturers Hanover Trust Co., dated

August 8, 1977
Jenkins, Llewellyn, executive vice president, Manufacturers Hanover Trust

Co., dated August 8, 1977
Lance, T. Bertram, Director, Office of Management and Budget, dated August

5, 1977.
McKean, Robert J., Jr., partner, Simpson, Thatcher and Bartlett, dated August

8, 1977.
Viener, Betsy Jo, vice president, Manufacturers Hanover Trust Co., dated
August 8, 1977

TABLES
Calhoun First National Bank (Calhoun, Georgia) correspondent bank balances

with the Citizens and Southern National Bank...
Calhoun First National Bank (Calhoun, Georgia) correspondent bank balances

with various banks ...... Loans by the Citizens and Southern National Bank, Atlanta, to T. Bertram

Lance and Lance related interests and correspondent bank balances of the

National Bank of Georgia
National Bank of Georgia correspondent bank balances with the Citizens and

Southern National Bank
National Bank of Georgia correspondent bank balances with the Continental

Illinois National Bank, Chicago (Conill)
National Bank of Georgia correspondent bank balances with the First National

Bank of Chicago
National Bank of Georgia correspondent bank balances with the First National

City Bank, New York (Citicorp)
National Bank of Georgia correspondent bank balances with the Manufactur-

ers Hanover Trust Co., (New York)
Dates of examination by the Comptroller of the Currency of the National Bank

of Georgia and the Calhoun First National Bank ...

1079

1216

1291

1272

1179

1008

1086

1093

388

397

379

381

383

385

382

384

395

THE SAFE BANKING ACT OF 1977

TUESDAY, SEPTEMBER 6, 1977

HOUSE OF REPRESENTATIVES,
SUBCOMMITTEE ON FINANCIAL INSTITUTIONS
SUPERVISION, REGULATION AND INSURANCE OF THE
COMMITTEE ON BANKING, FINANCE AND URBAN AFFAIRS,

Washington, D.C.
AFTERNOON SESSION (3:05 P.M.)
Chairman St GERMAIN. The subcommittee will be in order.
I will ask the witnesses to take the witness stand.

The following is an excerpt coming from a banking study done by the Federal Reserve Board staff back in 1941 since we are talking about examinations. I think it applies today.

Examinations are conducted in the interest of (1) the public, because a sound banking system is essential to the national economy and sound banks make a sound banking system; (2) the individual depositor, the safety of whose money depends on the character of the assets in which the bank's funds are invested and the way in which they are administered; (3) the stockholder, who invests in the banking business in the hope that his money will bring a return as a result of successful banking operations and will not have to be used to absorb losses.

I might parenthetically state that applies to minority stockholders.

(4) The directors, who accept grave responsibility for the direction and supervision of the affairs of the bank and to whom the examiner's report gives an independent view of its condition; and (5) the officers and operating personnel, who may find the examiner's observations helpful in the performance of their duties. Examinations also serve to protect good banks from the competition of banks that without the restraint of examination might be improperly operated and from the effects of failure of ich institutions.

I read that because of some of the observations made earlier today. That is why we are conducting these hearings and that is why we are interested, because of the importance of the examination and supervision of our banks. TESTIMONY OF KING CLEVELAND, DIRECTOR, NATIONAL BANK

OF GEORGIA, ATLANTA, GA.; JOHN E. DAVIS, PRESIDENT, CALHOUN FIRST NATIONAL BANK, CALHOUN, GA.; AND ROBERT GUYTON, PRESIDENT, NATIONAL BANK OF GEORGIA, ATLANTA, GA.

Chairman ST GERMAIN. Mr. Guyton, I see you have an opening statement which, without objection, will be inserted into the record at this point. [The opening statement of Mr. Guyton follows:)

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