that it inherited. For that reason, the RFC was brought into the picture. Then when the FDIC was given $120,000,000 a year income, it was given to them for a particular reason. That was to be used to try to bolster the banking system and keep it in a sound position.

Now, in addition to the right of purchasing assets, for consolidation or elimination, the FDIC should have authority for making subordinated deposits and they should have authority in extreme cases to purchase preferred stock, capital notes, and debentures.

If you give the FDIC that authority, and I would have no objection to including proper safeguards as to debentures and preferred stock, you will save a lot of banks. I wouldn't want the FDIC to have the authority to purchase preferred stock and then go out on some campaign for capital rehabilitation.

What I am thinking about on preferred stock is in case something should happen requiring some overnight help. I think this authority is very necessary.

I think, furthermore, that it may be necessary some time to make a subordinated deposit in the bank in place of taking assets out and going through all that process.

I am sure that if you will put that into the law you will strengthen it very much.

Insofar as the FDIC income is concerned, it never was intended that the FDIC would build up a reserve of $1,200,000,000 and lock it up and keep it there forever. When that $1,200,000,000 was created it was supposed to be there to use in case FDIC had unusual losses. I have no objection in the world to the reduction in the assessment. As Mr. Wiggins said, and you said, Senator, there was some talk about a $500,000,000 ceiling, then about a $750,000,000 limit, and then we agreed to take a look at the billion mark. Then we all got busy in the war effort and didn't pay any more attention to it. But, more important to the FDIC than income is its right to protect itself.

The FDIC over a period of years has done a good job in getting the State bank examiners and State legislators to improve their laws. The national banking system has been improved. The banking system generally is in good shape. But you cannot safely take the income away from FDIC and at the same time deprive it of its right of protection. If I had to choose between giving up all the income, and having the right to protect the FDIC, as Chairman, I would take the right to protect.

The FDIC has been conservatively operated. There will always be in this country, even in good times, certain numbers of unsound banks. There are a certain number of them today. You have always got to stay on top of them. I would go along with the assessment reduction; I would like to see that change made in the loaning privilege; I would go along on the $5,000 and $10,000 on the coverage, because I do not think it increases the liability, but the FDIC must be given adequate power to examine.

If the FDIC is properly run, the days of closed banks are all over, from a practical standpoint, because in the future the weak banks can be eliminated or helped before they are closed.

There are several other provisions that I would like to talk about. On the question of the Comptroller General. I understand that that language was straightened out between the FDIC and the GAO. In

what you have agreed on in the way of a General Accounting Office audit of the FDIC it is important not to let GAO interfere with the determination on paying off on what is a deposit liability of a bank or any part of the Corporation's management functions. The strength of the FDIC up to date has been that it could give the depositors their money within 2 or 3 days after a bank had closed. If you hamstring by audit or other controls the FDIC may lose its effectiveness.

The next thing that I would like to mention to you is the question of the building.

Senator MAYBANK. Well now, Mr. Crowley, the committee felt that we had no right to pass upon public works, since the reorganization bill, so I introduced a separate bill in order that the FDIC could be heard by the Public Works. Public Works has handled all these buildings since the Reorganization Act.

I took that section out of the bill and introduced it as a separate bill, believing that that was the intent of the reorganization law. You may say anything you wish for the record, of course. Mr. CROWLEY. Yes.

This question of the building for the FDIC has been something that has been discussed for a long, long time. The FDIC is like a child that was born kind of late into the family, and is not always sure that the rest of the family enjoyed having it come into the picture. There has been many an attempt here to keep the FDIC from getting a building. In 1939 Mr. Roosevelt told me to go ahead and arrange for construction of a building. The Bureau of the Budget went into the matter with us at that time and approved the project.

Our general counsel and the Bureau of the Budget's general counsel held that under the law we needed no further authority from Congress because we had the right to construct a building for our office quarters. I thought it would be rather bad grace for us to build a building without advising the Banking and Currency Committees of Congress.

Accordingly we visited the Senate Banking and Currency Committee and also the same committee on the House side. It was agreed by both committees that we would go ahead and build a building.

About that time we got involved in the war, and, of course, it was no time to talk about building a building then.

The FDIC is entitled to permanent quarters. It is entitled to the dignity and respect that goes with having its own building. The quesion of the FDIC's building is not a new thing around Washington. It is not a new difference of opinion between Mr. Eccles and myself. Mr. Eccles didn't want the FDIC to build a new building. He finally agreed that maybe what we ought to do was to build an addition onto his building, where it would be more convenient to the Federal Reserve.

Senator MAYBANK. Let me get this clear: As far as I know, personally, since this bill came down here, I have had no complaint from the Federal Reserve this time about this building. Mr. McCabe hasn't made complaint to me. The attitude I took was merely believing that the Public Works had the right to approve. I introduced the bill for them. I intend to testify before the committee. They are losing a lot of valuable time and efficiency in being scattered around; isn't that right?

Mr. CROWLEY. That is right.

Senator MAYBANK. Then they have the heavy charges, too. There would be more than enough to amortize it. Would that be right? Mr. CROWLEY. That is right. I think anytime you move in a new building, it will cost you more money in the beginning, but I think it gives increased efficiency and increased prestige.

Senator MAYBANK. That is right. They pay considerable rent, too. Mr. CROWLEY. Let me say this, too

Senator MAYBANK. They pay $194,000 rent.

Mr. CROWLEY. Let me say this in relation to that: If I was in charge of the FDIC and had any influence, I would tie this bill up until I got the provisions that I thought I was entitled to, not let this assessment reduction escape, and then have everything else hung in the air, because I have seen those things done too often around here. The Corporation is giving up a lot when it is giving this assessment reduction. Senator MAYBANK. Nobody is fighting this building, to my knowledge.

Mr. CROWLEY. I wish I could believe so. I believe you, but I wish I could have the confidence in it that you have.

If it gets over to that committee, that will be the end of it. It will not see the light of day for a good many years, until we come up again for another reduction in assessment. That will happen.

Senator MAYBANK. I wouldn't know that.

Senator Chavez has been in New Mexico. I intend to talk with him as soon as he gets back.

Mr. CROWLEY. I would like to comment on another section. It doesn't amount to much: In qualifying for director, if a man happened to be arrested and found guilty, he could work in an insured bank. I don't think they intended to put a death sentence over anyone. I think the FDIC has all the authority it needs to pass on the directors and officers of a bank that is insured without putting that death sentence in. That is in subsection S. S. S., page 55.

Senator MAYBANK. That was called to my attention.

Mr. CROWLEY. I want to make myself clear on the right of examination, Senator: The only protection the FDIC now has is the right to examine insured banks. That doesn't mean that you have a lot of duplication in examination.

Senator MAYBANK. That is the only right they have?

Mr. CROWLEY. That is the only right.

Senator MAYBANK. What do you think of that amendment?

Mr. CROWLEY. I will look at that and talk to you about it.

On the payment of interest, Senator Douglas, I won't object to the FDIC paying that interest, as Mr. Wiggins said, if you are going to make them all do the same, but don't forget we are the only agency that paid back the original fund.

Senator DOUGLAS. I am glad that you would be willing to take this first step toward reform.

Mr. CROWLEY. That is all I have to say, Mr. Chairman, unless you have questions.

Senator MAYBANK. I do wish you would study that and write us a memo on it. That is, the examination. You might not have time do it now. We will not meet again until Wednesday.

I have no questions.