bank. Thereafter the Corporation shall be liable for the obligations of such bank and shall be the owner of its assets. The provisions of sections 5220 and 5221 of the Revised Statutes (U. S. C., title 12, secs. 181 and 182) shall not apply to such new banks.

"SEC. 12. (a) Notwithstanding any other provision of law, the Corporation as receiver of a closed national bank or District bank shall not be required to furnish bond and shall have the right to appoint an agent or agents to assist it in its duties as such receiver, and all fees, compensation, and expenses of liquidation and administration thereof shall be fixed by the Corporation, and may be paid by it out of funds coming into its possession as such receiver.

"(b) Payment of an insured deposit to any person by the Corporation shall discharge the Corporation, and payment of a transferred deposit to any person by the new bank or by an insured bank in which a transferred deposit has been made available shall discharge the Corporation and such new bank or other insured bank, to the same extent that payment to such person by the closed bank would have discharged it from liability for the insured deposit.

"(c) Except as otherwise prescribed by the Board of Directors, neither the Corporation nor such new bank or other insured bank shall be required to recognize as the owner of any portion of a deposit appearing on the records of the closed bank under a name other than that of the claimant, any person whose name or interest as such owner is not disclosed on the records of such closed bank as part owner of said deposit, if such recognition would increase the aggregate amount of the insured deposits in such closed bank.

"(d) The Corporation may withhold payment of such portion of the insured deposit of any depositor in a closed bank as may be required to provide for the payment of any liability of such depositor as a stockholder of the closed bank, or of any liability of such depositor to the closed bank or its receiver, which is not offset against a claim due from such bank, pending the determination and payment of such liability by such depositor or any other person liable therefor. "(e) If, after the Corporation shall have given at least three months' notice to the depositor by mailing a copy thereof to his last-known address appearing on the records of the closed bank, any depositor in the closed bank shall fail to claim his insured deposit from the Corporation within eighteen months after the appointment of the receiver for the closed bank, or shall fail within such period to claim or arrange to continue the transferred deposit with the new bank or with the other insured bank which assumes liability therefor, all rights of the depositor against the Corporation with respect to the insured deposit, and against the new bank and such other insured bank with respect to the transferred deposit, shall be barred, and all rights of the depositor against the closed bank and its shareholders, or the receivership estate to which the Corporation may have become subrogated, shall thereupon revert to the depositor. The amount of any transferred deposits not claimed within such eighteen months' period, shall be refunded to the Corporation.

"SEC. 13. (a) Money of the Corporation not otherwise employed shall be invested in obligations of the United States or in obligations guaranteed as to principal and interest by the United States, except that for temporary periods, in the discretion of the Board of Directors, funds of the Corporation may be deposited in any Federal Reserve bank or with the Treasurer of the United States. When designated for that purpose by the Secretary of the Treasury, the Corporation shall be a depositary of public moneys, except receipts from customs, under such regulations as may be prescribed by the said Secretary, and may also be employed as a financial agent of the Government. It shall perform all such reasonable duties as depositary of public moneys and financial agent of the Government as may be required of it.

"(b) In order to prevent the closing of an insured bank or in order to reopen a closed insured bank, the Corporation, in the discretion of its Board of Directors, is authorized to make loans to, or purchase the assets of, such an insured bank upon such terms and conditions as the Board of Directors may prescribe.

"(c) Receivers or liquidators of insured banks closed on account of inability to meet the demands of their depositors shall be entitled to offer the assets of such banks for sale to the Corporation or as security for loans from the Corporation, upon receiving permission from the appropriate State authority in accordance with express provisions of State law in the case of insured State banks. The proceeds of every such sale or loan shall be utilized for the same purposes and in the same manner as other funds realized from the liquidation of the assets of such banks. In any case where prior to the effective date of this Act, the Comptroller of the Currency has appointed a receiver of a closed na

tional bank other than the Corporation, he may, in his discretion, pay dividends on proved claims at any time after the expiration of the period of advertisement made pursuant to section 5235 of the Revised Statutes (U. S. C., title 12, sec. 193), and no liability shall attach to the Comptroller of the Currency or to the receiver of any such national bank by reason of any such payment for failure to pay dividends to a claimant whose claim is not proved at the time of any such payment. The Corporation, in its discretion, may make loans on the security of or may purchase and liquidate or sell any part of the assets of an insured bank which is now or may hereafter be closed on account of inability to meet the demands of its depositors, but in any case in which the Corporation is acting as receiver of a closed insured bank, no such loan or purchase shall be made without the approval of a court of competent jurisdiction.

"(d) Whenever in the judgment of the Board of Directors such action will reduce the risk or avert a threatened loss to the Corporation and will facilitate a merger or consolidation of an insured bank with another insured bank, or will facilitate the sale of the assets of an open or closed insured bank to and assumption of its liabilities by another insured bank, the Corporation may, upon such terms and conditions as it may determine, make loans secured in whole or in part by assets of an open or closed insured bank, which loans may be in subordination to the rights of depositors and other creditors, or the Corporation may purchase any such assets or may guarantee any other insured bank against loss by reason of its assuming the liabilities and purchasing the assets of an open or closed insured bank. Any insured national bank or District bank, or the Corporation as receiver thereof, is authorized to contract for such sales or loans and to pledge any assets of the bank to secure such loans.

"SEC. 14. The Corporation is authorized to borrow from the Treasury, and the Secretary of the Treasury is authorized and directed to loan to the Corporation on such terms as may be fixed by the Corporation and the Secretary, such funds as in the judgment of the Board of Directors of the Corporation are from time to time required for insurance purposes, not exceeding in the aggregate $3,000,000,000 outstanding at any one time: Provided, That the rate of interest to be charged in connection with any loan made pursuant to this paragraph shall not be less than the current average rate on outstanding marketable and nonmarketable obligations of the United States as of the last day of the month preceding the making of such loan. For such purpose the Secretary of the Treasury is authorized to use as a public-debt transaction the proceeds of the sale of any securities hereafter issued under the Second Liberty Bond Act, as amended, and the purposes for which securities may be isued under the Second Liberty Bond Act, as amended, are extended to include such loans. Any such loan shall be used by the Corporation solely in carrying out its functions with respect to such insurance. All loans and repayments under this section shall be treated as public-debt transactions of the United States.

"SEC. 15. All notes, debentures, bonds, or other such obligations issued by the Corporation shall be exempt, both as to principal and interest, from all taxation (except estate and inheritance taxes) now or hereafter imposed by the United States, by any Territory, dependency, or possession thereof, or by any State, county, municipality, or local taxing authority. The Corporation, including its franchise, its capital, reserves, and surplus, and its income, shall be exempt from all taxation now or hereafter imposed by the United States, by any Territory, dependency, or possession thereof, or by any State, county, municipality, or local taxing authority, except that any real property of the Corporation shall be subject to State, Territorial, county, municipal, or local taxation to the same extent according to its value as other real property is taxed: Provided, That any building now or hereafter owned by the Corporation in the District of Columbia and used principally as an office building of the Corporation, together with the land upon which the same stands, and all appurtenances, buildings, and lands used principally in connection therewith, shall be exempt from any and all taxation.

"SEC. 16. In order that the Corporation may be supplied with such forms of notes, debentures, bonds, or other such obligations as it may need for issuance under this Act, the Secretary of the Treasury is authorized to prepare such forms as shall be suitable and approved by the Corporation, to be held in the Treasury subject to delivery, upon order of the Corporation. The engraved plates, dies, bed pieces, and other material executed in connection therewith shall remain in the custody of the Secretary of the Treasury. The Corporation shall reimburse the Secretary of the Treasury for any expenses incurred in the preparation, custody, and delivery of such notes, debentures, bonds, or other such obligations.

"SEC. 17. (a) The Corporation shall annually make a report of its operations to the Congress as soon as practicable after the 1st day of January in each year. "(b) The financial transactions of the Corporation shall be audited by the General Accounting Office in accordance with procedures applicable to commercial corporate transactions and under such rules and regulations as may be agreed upon by the Comptroller General and the Board of Directors. The audit shall be conducted at the place or places where accounts of the Corporation are normally kept and all books, records, and documents of the Corporation shall remain in possession and custody of the Corporation. The audit hereby authorized shall be made beginning with financial transactions occurring on and after August 31, 1948. A report of the audit for each fiscal year ending on June 30 shall be made by the Comptroller General to the Congress not later than January 15, following the close of such fiscal year. The report shall set forth the scope of the audit and shall include a statement of assets and liabilities, surplus or deficit; a statement of surplus or deficit analysis; a statement of income and expenses; a statement of sources and application of funds and such comments as may be necessary to inform Congress of the financial condition of the Corporation. Each such report shall be furnished to the Corporation for comment prior to its submission to the Congress. The Corporation shall have twenty days to formulate and transmit its comments on the report to the Comptroller General and the Comptroller General shall include in an appendix to the report such comments as the Corporation may make. On or before August 1 of each year the Comptroller General shall determine whether the General Accounting Office will be able to complete an audit for the preceding fiscal year and report thereon to Congress by the following January 15 and shall send written notification of such determination to the Corporation. In the event the Comptroller General determines that, in respect to any fiscal year, the General Accounting Office cannot complete an audit and make a report thereon to the Congress by the following January 15 and so notifies the Corporation in writing on or before August 1 following the close of such fiscal year, or in the event the Comptroller General shall fail to notify the Corporation in writing on or before August 1 of any year as to his determination relative to the audit for the preceding fiscal year, the Corporation shall be authorized to engage a firm or firms of certified public accountants to make the required audit for that fiscal year. The audit reports of such certified public accountants shall be forwarded to the Comptroller General and the Corporation not later than December 1 following the close of fiscal year for which the audit is made and the Comptroller General, not later than the following January 15, shall forward the report to the Congress together with such comments as he and the Corporation may make on said report. The Corporation shall reimburse the General Accounting Office for the actual cost of any such audit made by that Office and the expenses of audit by any certified public accountants employed by the Corporation under authority hereof shall be paid by the Corporation directly to said firms and organizations.

"SEC. 18. (a) Every insured bank shall display at each place of business maintained by it a sign or signs, and shall include in advertisements relating to deposits a statement, to the effect that its deposits are insured by the Corporation. The Board of Directors shall prescribe by regulation the forms of such signs and the manner of display and the substance of such statements and the manner of use. For each day an insured bank continues to violate any provisions of this paragraph or any lawful provisions of said regulations, it shall be subject to a penalty of $100, which the Corporation may recover for its use.

"(b) No insured bank shall pay any dividends on its capital stock or interest on its capital notes or debentures (if such interest is required to be paid only out of net profits) or distribute any of its capital assets while it remains in default in the payment of any assessment due to the Corporation; and any director or officer of any insured bank who participates in the declaration cr payment of any such dividend or interest or in any such distribution shall, upon conviction, be fined not more than $1,000 or imprisoned not more than one year, or both: Provided, That, if such default is due to a dispute between the insured bank and the Corporation over the amount of such assessment, this subsection shall not apply, if such bank shall deposit security satisfactory to the Corporation for payment upon final determination of the issue.

"(c) Without the prior written consent of the Corporation, no insured bank shall (1) merge or consolidate with any noninsured bank or institution or convert into a noninsured institution or assume liability to pay any deposits made in, or similar liabilities of, any noninsured bank or institution or (2)

transfer assets to any nonnsured bank or institution in consideration of the assumption of liability for any portion of the deposits made in such insured bank, and no insured State nonmember bank (except a District bank) without such consent shall reduce the amount or retire any part of its common or preferred capital stock, or retire any part of its capital notes or debentures.

"(d) No State nonmember insured bank (except a District bank) shall establish and operate any new branch unless it shall have the prior written consent of the Corporation, and no State nonmember insured bank (except a District bank) shall move its main office or any branch from one location to another without such consent. The factors to be considered in granting or withholding the consent of the Corporation under this subsection shall be those enumerated in section 6 of this Act.

"(e) The Corporation may require any insured bank to provide protection and indemnity against burglary, defalcation, and other similar insurable losses. Whenever any insured bank refuses to comply with any such requirement the Corporation may contract for such protection and indemnity and add the cost thereof to the assessment otherwise payable by such bank.

"(f) Whenever any insured bank (except a national bank or a District bank), after written notice of the recommendations of the Corporation based on a report of examination of such bank by an examiner of the Corporation, shall fail to comply with such recommendations within one hundred and twenty days after such notice, the Corporation shall have the power, and is hereby authorized, to publish only such part of such report of examination as relates to any recommendation not complied with: Provided, That notice of intention to make such publication shall be given to the bank at least ninety days before such publication is made.

"(g) The Board of Directors shall by regulation prohibit the payment of interest on demand deposits in insured nonmember banks and for such purpose it may define the term 'demand deposits'; but such exceptions from this prohibition shall be made as are now or may hereafter be prescribed with respect to deposits payable on demand in member banks by section 19 of the Federal Reserve Act, as amended, or by regulation of the Board of Governors of the Federal Reserve System. The Board of Directors shall from time to time limit by regulation the rates of interest or dividends which may be paid by insured nonmember banks on time and savings deposits, but such regulations shall be consistent with the contractual obligations of such banks to their depositors. For the purpose of fixing such rates of interest or dividends, the Board of Directors shall by regulation prescribe different rates for such payment on time and savings deposits having different maturities, or subject to different conditions respecting withdrawal or repayment, or subject to different conditions by reason of different locations, or according to the varying discount rates of member banks in the several Federal Reserve districts. The Board of Directors shall by regulation define what constitutes time and savings deposits in an insered nonmember bank. Such regulations shall prohibit any insured nonmember ank from paying any time deposit before its maturity evcept upon such conditions and in accordance with such rules and regulations as may be prescribed by the Board of Directors, and from waiving any requirement of notice before payment of any savings deposit except as to all savings deposits having the same requirement. For each violation of any provision of this subsection or any lawful provision of such regulations relating to the payment of interest or dividends on deposits or to withdrawal of deposits, the offending bank shall be subject to a penalty of $100, which the Corporation may recover for its use.

"(h) Any insured bank which willfully fails or refuses to file any certified statement or pay any assessment required under this section shall be subject to a penalty of $100 for each day that such violations continue, which penalty the Corporation may recover for its use: Provided, That this paragraph shall not be applicable under the circumstances stated in the proviso of paragraph (b) of this subsection.

"SEC. 19. Except with the written consent of the Corporation, no person shall serve as a director, officer, or employee of an insured bank who has been convicted, or who is hereafter convicted, of any criminal offense involving dishonesty or a breach of trust. For each violation of this prohibition, the bank involved shall be subject to a penalty of $100 for each day this prohibition is violated, which the Corporation may recover for its use.

"SEC. 20. It is not the purpose of this Act to discriminate in any manner against State nonmember banks and in favor of national or member banks; but the purpose is to provide all banks with the same opportunity to obtain and enjoy the benefits of this Act. No bank shall be discriminated against because its

capital stock is less than the amount required for eligibility for admission into the Federal Reserve System.

"SEC. 21. The provisions of this Act limiting the insurance of the deposits of any depositor to a maximum less than the full amount shall be independent and separable from each and all of the provisions of this Act."

SEC. 3. The third paragraph of section 709, title 18, United States Code, is amended to read as follows:

"Whoever uses the words 'Federal Deposit', 'Federal Deposit Insurance', or 'Federal Deposit Insurance Corporation' or a combination of any three of these words, as the name or a part thereof under which he or it does business, or advertises or otherwise represents falsely by any device whatsoever that his or its deposit liabilities, obligations, certificates, or shares are insured or guaranteed by the Federal Deposit Insurance Corporation, or by the United States or by any instrumentality thereof, or whoever advertises that his or its deposits, shares, or accounts are federally insured, or falsely advertises or otherwise represents by any device whatsoever the extent to which or the manner in which the deposit liabilities of an insured bank or banks are insured by the Federal Deposit Insurance Corporation; or".

SEC. 4. Section 220, title 18, United States Code, is amended to read as follows: "Whoever, being an officer, director, employee, agent, or attorney of any bank, the deposits of which are insured by the Federal Deposit Insurance Corporation, of a Federal intermediate credit bank, or of a National Agricultural Credit Corporation, except as provided by law, stipulates for or receives or consents or agrees to receive any fee, commission, gift, or thing of value, from any person, firm, or corporation, for procuring or endeavoring to procure for such person, firm, or corporation, from any such bank or corporation, any loan or extension or renewal of loan or substitution of security, or the purchase or discount or acceptance of any paper, note, draft, check, or bill of exchange by any such bank or corporation, shall be fined not more than $5,000 or imprisoned not more than one year or both."

Senator ROBERTSON. Frankly, I have had no opportunity to examine either of the two bills, but a hasty glance at them indicates that the approach is somewhat different. Senate 2300 seems to be a bill to curtail the assessment of the member banks until the reserve fund falls below a certain sum, $1,000,000,000 I believe, and then the amount necessary will be assessed.

The Maybank bill, S. 2822, evidently has a good many matters in it, because it is 57 pages long. I understand that one of the major features of that bill is to give the banks some relief through what might be called dividend payments on any surplus that may be in the hands of this administrative agency.

The first witness is Hon. Maple T. Harl, the chairman of the Federal Deposit Insurance Corporation. The subcommittee will be glad to hear from Mr. Harl. I will present to him a copy of S. 2300 and let him see if he is familiar with it, realizing, of course, that he came here this morning prepared to testify on the new bill, S. 2822.

Now, Mr. Harl, you may present your testimony in such order as you may see fit.

STATEMENT OF MAPLE T. HARL, CHAIRMAN, BOARD OF DIRECTORS, FEDERAL DEPOSIT INSURANCE CORPORATION, ACCOMPANIED BY H. EARL COOK, MEMBER, BOARD OF DIRECTORS; E. H. CRAMER, DIRECTOR OF RESEARCH AND STATISTICS; L. L. ROBERTSON, ASSISTANT TO CHAIRMAN; AND N. C. BAKKE, ASSOCIATE GENERAL COUNSEL

Senator MAYBANK. First, Mr. Harl, let me ask you a question-if I may, Mr. Chairman.

Senator ROBERTSON. Yes.