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Mr. PECORA. Hadn't you expected to be called as a witness up to the time you were requested to appear!

Mr. MURFIN. I had not.

Mr. PECORA. Had you indicated your desire to testify prior to the time when you were called ?

Mr. MURFIN. Quite the contrary. I did not know why I was called there, or why I was called here. The contrary was that many officers and executives knew a hundred times as much about it as I did.

Senator COUZENS. Judge Murfin, I can tell you why you were called here. It was because at the time you were called here we did not have the committee's report on the examination of Mr. Verhelle's private and confidential report.

Mr. MURFIN. That is what Mr. Pecora told me on yesterday.

Mr. PECORA. Judge Murfin, were you during the year 1931, or, rather, during the year 1932 and up to the time that the receiver for the bank was appointed—which, I believe, was in March 1933, wasn't it?

Mr. MURFIN. The receiver was appointed in May. The conservator went in in March.

Mr. PECORA. Had you kept yourself currently posted as to the condition of the affairs of the bank!

Mr. MURFIN. I did, except for the year 1932, when I had this attack of phlebitis, which laid me up the last week in May and I did not get down but 1 hour until January.

Mr. PECORA. Until the following January, in 1933 ?
Mr. MURFIN. Yes.

Mr. PECORA. Do you recall the general substance of the testimony you gave in that so-called “one-man grand jury

one-man grand jury” proceeding last year?

Mr. MURFIN. Oh, I recall it in general. I was mad, and lost my temper, as one often does in such a case, and was sorry that I did.

Mr. PECORA. Well, there was no one there bully-ragging you to cause you to lose your temper, was there?

Mr. MURFIN. No. I was not bully-ragged at all. I did the bullyragging on my own account.

Mr. PECORA. I have had the pleasure of reading the testimony you gave before that one-man grand jury within the last 24 hours, and I could not see anything in the line of questioning to which you were subjected that would ordinarily cause a witness to lose his temper.

Mr. MURFIN. Well

Mr. PECORA (continuing). Was your loss of temper due to any instance that you can recall?

Mr. MURFIN. I do not know that this is a proper inquiry for this committee, is it?

Mr. PECORA. Well-
Mr. MURFIN (resuming). I might say-

Mr. PECORA (continuing). If you do not want to answer the question, I will not press it.

Mr. MURFIN. During this period of the one-man grand jury the city of Detroit was agog with talk and gossip and recriminations and calling of names, and there was a spirit of controversy wherever one went. You could go to your club and you heard nothing else than something of this kind: Why did he say that? Why didn't he say the other! The town was seething. I do not believe it would be profitable to stir up things that should not be stirred up.

Mr. PECORA. Well, do you think the subject matter of the testimony which you gave in that one-man grand jury proceeding is something wholly unrelated to the purpose of this inquiry?

Mr. MURFIN. I would think so. This inquiry is only justified on the ground that you are eliciting information in aid of framing legislation. And what a poor bank director said last July would not aid you in framing any legislation.

Mr. Pecora. Well, in order that anybody may properly and appropriately frame legislation, it would be advisable to have a factual basis, wouldn't it?

Mr. MURFIN. Correct.

Mr. PECORA. And this committee, as you undoubtedly know, is charged with the mission of inquiring into banking customs and practices generally. You know that, don't you, Judge Murfin?

Mr. MURFIN. I suppose so.

Mr. PECORA. Now, the one-man grand jury proceeding to which reference has been made was a proceeding that had to do with banking conditions in the city of Detroit, and throughout the State of Michigan generally, in recent times.

Mr. MURFIN. The 1-man grand jury in Detroit was supposed to inquire into the causes for the closing of the Detroit banks and why they could not get them reopened.

Nr. Pecora. Who initiated that proceeding?

Mr. MURFIN. Oh! There was more or less quite a clamor about it, and some of the newspapers took it up, and finally, after some considerable newspaper agitation, the attorney general of the State came in and asked for a grand jury. Then there was a colloquy as to whether it would be a secret grand jury or an open grand jury, or as to whether they could have an open grand jury; and they monkeyed around about it and decided to have this 1-man grand jury; and about this time the prosecuting attorney stepped into the picture, and I think the general feeling in Detroit, if I may use a colloquialism, was that he stole the show from the attorney general. It was quite a circus. It gaves the newspapers copy and it kept the town stirred and kept the people irritated, and what was said and done there would not help here.

Mr. PECORA. Do you know what prompted the attorney general to initiate the proceeding? Was it, for instance, by reason of any request made of him to do so by the bank or by any of the officers or directors of the bank?

Mr. MURFIN. I am quite sure it did not come from the bank or any of the officers or directors of the bank. I am quite sure it was because of the public clamor, superinduced by the newspapers fanning the flames. I am quite certain it was not brought about by any request of any bank or the officers of any banks.

Mr. PECORA. Do you recall having given expression to opinions about different matters you were questioned about in that one-man grand jury proceeding?

Mr. MURFIN. I do not recall what you mean as I have not read a lot of the testimony. I don't think I even had a copy of it. I may

have a copy of it at home, I don't know, but I haven't seen it since. If you had read it within the last 24 hours you know more about what I said than I do.

Mr. PECORA. I simply asked you if you recalled having expressed any opinions that were stated by you in the course of your examination.

Mr. MURFIN. Oh, yes. I expressed several opinions.

Mr. PECORA. And do you adhere to those opinions today, or have you had any occasion to revise them in any way!

Mr. MURFIN. If you will ask me about the particular opinion you want to know about I will answer.

Mr. PECORA. Can't you tell me generally whether or not the opinions you entertained when you testified before that one-man grand jury proceeding, are the opinions that you have today on those subjects?

Mr. MURFIN. Insofar as my testimony went affecting the solvency of the bank on the 14th of February 1933, I am still firmly of the opinion that the bank was thoroughly solvent and should have been allowed to go on in business. I haven't changed my mind on that question one particle.

Mr. PECORA. Have you made a study of the condition of the bank upon which you based that opinion?

Mr. MurFix. I thought at the time I knew something about it Since that time we have had no access whatever to a single document, not one.

Mr. PECORA. Well, haven't you

Mr. MURFIN (continuing). In fact, the Comptroller of the Currency refused to let Mr. Leyburn even talk to me.

Mr. PECORA. Had you made prior to the time when you testified in that 1-man grand-jury proceeding a study of the bank's condition and situation of affairs upon which you based the opinion that you then testified to and which you have repeated here?

Mr. MURFIN. If you mean going through with an auditor or accountant, no. But I thought I knew the condition of the bank. I thought my service on the executive committee gave me a general i idea as to its situation. I had these reports from time to time at committee meetings, from the various officers, which reports I believed. I had been shown in the early part of January, and I have forgotten whether it was by Mr. Sweeny or by Mr. Mills, & statement showing that the bank had earned over $6,000,000 the preceding year.

Mr. Pecora. That is, in the year 1932?
Mr. MURFIN. Yes, sir.
Mr. PECORA. Yes. Go ahead.

Mr. MURFIN. I knew of the very large charge-offs that had been made. I had been informed, but I was not present at the meeting, that the Comptroller asked for a charge-off of $6,000,000, I think in December, and that it was immediately made. I knew that very large charge-offs had been made. I knew that the past dues had ceased to accumulate. They accumulated, irrespective, for a while, but I knew they had ceased to accumulate. I thought we were getting it licked, I mean the past-due paper. I knew of the economies in operation that had been made; and I knew that

Mr. PECORA (interposing). Well—but go ahead. I beg your pardon.

Mr. MURFIN (continuing). And I knew of the situation in that general way. That is what I predicated my opinion on.

Mr. PECORA. All economies in operation would be reflected in the earnings.

Mr. MURFIN. Yes, sir.

Mr. PECORA. You said you had been told in January of 1933 by Mr. Mills

Mr. MURFIN (interposing). Or by Mr. Sweeny, and I am not sure which.

Mr. PECORA (continuing). Or by Mr. Sweeny, who were then, respectively, chairman of the board and president of the bank.

Mr. MURFIN. Right.

Mr. PECORA. Of the bank having had earnings in excess of $6,000,000 during the preceding year.

Mr. MURFIN. Right.

Mr. PECORA. Were you told what the charge-offs were that were made in that year?

Mr. MURFIN. I knew at the time; yes. Mr. PECORA. What were they? Mr. MURFIN. Oh! I don't remember now, Mr. Pecora. And I will say that I have the poorest memory for figures and details you can imagine. I just hate details.

Mr. PECORA. Well, you seem to recall at least the figures relating to earnings that were reported to you for the year.

Mr. MURFIN. That is true.

Mr. PECORA. Well, now, I wonder why you do not recall the amount of the charge-offs that were reported to you as having been made during the year.

Mr. MURFIN. The psychology of the question probably is that the earnings pleased me more than the charge-offs, and that is the reason why I remember them better. I do not know, but that is just a guess.

Mr. Pecora. What is your best guess about that?
Mr. MURFIN. The charge-offs were very, very large.
Mr. PECORA. What is your best guess as to the amount of them?

Mr. MURFIN. Oh! I don't remember. I think it was—Oh! It seems to me it was 20-odd million dollars, but that is a guess. You have asked me to guess and I have guessed.

Mr. PECORA. Was it your opinion that the bank was in better condition at the end of the year 1932 than it was at the end of the year 1931 ?

Mr. MURFIN. Correct. And that was the opinion of our executive officers. And that opinion was frequently expressed as they were winding up the business. You see, I had been out of touch with everything for many months, and I went down and spent one afternoon, and I asked a lot of questions, and that was the general opinion around the bank, that she was going along in better shape.

Senator COUZENS. That was in January of 1933 ?
Mr. MURFIN. Yes.

Mr. PECORA. Did you know, then, or do you know now, what was the aggregate capital, surplus, and 'undivided profits of the bank at

the time of the consolidation on December 31, 1931, and what the figures were at the end of the year 1932?

Mr. MURFIN. No. The capital was $25,000,000, and I know that the surplus and undivided profits had been cut into frightfully Yes, they had been cut into frightfully.

Mr. PECORA. In the year 1932?
Mr. MURFIN. Yes, sir.
Mr. PECORA. And the surplus had been greatly reduced.
Mr. MURFIN. That is correct.
Mr. PECORA. Does that indicate a better condition?
Mr. MURFIN. Why, it indicates that you are cleaning house; yes

Mr. PECORA. Does it indicate that the bank was in better position financially at the end of the year 1932 than it was the year before that?

Mr. MURFIN. I think so; yes, sir. Do you want me to tell you why! Mr. PECORA. I haven't any objection to your telling us why.

Mr. MURFIN. Well, if you want my opinion, a lot of those bad loans that have been criticized were old weather-beaten loans

Mr. PECORA (interposing). Now, which loans do you refer to!

Mr. MURFIN. Oh, the loans you have been criticizing here, a number of them.

Mr. PECORA. What loans have I been criticizing here!
Mr. MURFIN. Officers' loans, for example.
Mr. PECORA. What loans have I been criticizing?
Mr. MURFIN. Officers' loans, I have heard you criticize.

Mr. PECORA. I haven't criticized anything. I have merely put into the record criticisms which were criticisms that were made, for instance, by bank examiners.

Mr. MURFIN. Well, perhaps the form of your questions made me think you were critical of them.

Mr. PECORA. I am merely attempting to elicit the facts, Judge Murfin. Mr. MURFIN. Well, I am trying to help you. Mr. PECORA. All right. Mr. MURFIN. But I wish you wouldn't ask me to guess so much.

Mr. PECORA. Well, unfortunately, I have to ask you to guess where you cannot give us anything better than a guess. I wish you to give us exact knowledge if you possess it.

Mr. MURFIN. Well, there are so many men better qualified to give you those facts than I am.

Mr. PECORA. Who, for instance, would you recommend as better qualified than you!

Mr. MURFIN. Mr. Mills, Mr. Bodde, Mr. Chittenden, Mr. Sweeny, Mr. McGonegal, Mr. Pipper. And Mr. Mark Wilson, sitting over there, knows more about it than almost anybody.

Mr. Pecora. Mr. Mark Wilson is going to testify. He has been subpenaed here for that purpose.

Mr. MURFIN. He will tell you the truth, and he is a marvelous man, being a master of details, while I hate details, and he was an expert on that matter and was charged with that duty. He can tell you as much about it as anybody I know.

Mr. PECORA. Would you depend on Mr. Wilson's testimony as to the facts ?

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