Mr. PECORA. Which were those, in their opinion, that had considerable frozen assets?

Mr. FORD. The Union Guardian Trust Co. was the worst.

Mr. PECORA. Which were the others that had frozen assets?
Mr. FORD. I guess they all had to a certain extent.

Mr. PECORA. Which were those that, in their opinion, as stated to you, were considered by them to be in need of outside relief? And when I say "outside relief " I mean, relief from outside the Group. Mr. FORD. The plan was to secure sufficient from the Reconstruction Finance Corporation, if possible, to bolster up perhaps all of the units, to put them in shape so that they would weather any storm that might come later on. That was the purpose of the plan.

Mr. PECORA. Well, in the formulation of the plan had any study or survey been made, so far as you know, by anyone, showing the condition of the various banking units in the Group and the condition of the Group itself?

Mr. FORD. Yes, sir.

Mr. PECORA. Were the results of such a survey or examination placed before you?

Mr. FORD. In the form of a discussion; perhaps not a report.

Mr. PECORA. If they were placed before you in the form of a discussion or in any other way, what information was given to you indicating the condition of the Group and its various unit banks, in January 1933 ?

Mr. FORD. I knew the condition of the group, because of the loans that they had made. Loans were made from time to time to assist the units of the group. This was a further requirement of the units of the group as a precaution to a great extent.

Mr. PECORA. Tell the committee what you knew, then, whether it was knowledge acquired by you directly or whether it was hearsay obtained by you from Mr. Longley or Mr. Kanzler or any other officers of the group.

Mr. FORD. It was information given to me by the officers whom I have mentioned and perhaps others whom I do not recall.

Mr. PECORA. What was the substance of that information? In other words, did they tell you just the condition of each banking unit in the group or the condition of the group itself?

Mr. FORD. Not in any great detail.

Mr. PECORA. To what extent did they inform you about the condition of such unit banks?

Mr. FORD. They enumerated the various banks and said that such and such a bank was in more or less liquid condition, some more liquid than others, and that the less liquid ones would need assistance. I do not recall which ones outside of the Union Guardian Trust Co.

Mr. PECORA. Did you ever attend any meeting of the board of directors of the group or the advisory committee of the board of directors of the group at which there was specifically discussed and considered the condition of each banking unit in the group?

Mr. FORD. A specific meeting?

Mr. PECORA. Any meeting at all.
Mr. FORD. I do not remember.

Mr. PECORA. You do not remember any such meeting of the board of directors attended by you at which that subject came up for discussion?

Mr. FORD. No, sir; I do not. My discussions were principally with the officers mentioned, in discussion of the problems of the units. Mr. PECORA. Tell us in as much detail as your memory will enable you to do what Mr. Kanzler said to you in January 1933 concerning the condition of the group and its banking units that rendered it advisable or necessary to seek financial assistance from the R.F.C.? Mr. FORD. The Trust Co. had

Mr. PECORA. You mean the Union Guardian Trust Co.?

Mr. FORD. Yes-I am sorry. The Union Guardian Trust Co. was in a frozen condition. It had a banking department which was being depleted by withdrawals, and the assets of the bank had frozen to such an extent that they could not be liquidated fast enough to take care of the withdrawals. That was the major problem that was presented down here to the Reconstruction Finance Corporation, and, as I remember it, the suggestion was made that not only should the Trust Co. be taken care of but any other units that needed assistance from the Reconstruction Finance Corporation should be included in this commitment or requirement whereby the units could be put on a sufficiently liquid basis to take care of any withdrawals that might come along.

Mr. PECORA. What units other than the Union Guardian Trust Co. did Mr. Kanzler tell you were in such condition as to require assistance from the R.F.C.?

Mr. FORD. I could not answer that from any definite remembrance at all. I think Flint was one, the unit at Flint, Mich., and I think Lansing was another.

Senator ADAMS. Were you seeking to make a loan to the group from the R.F.C. or individual loans to the different units?

Mr. FORD. I think it was one loan from the R.F.C. in which the collateral was to be put up by these units and the assistance to go back to these units in the way of cash from the Reconstruction Finance Corporation.

Mr. PECORA. Have you told us the substance of all that Mr. Kanzler stated to you on that subject?

Mr. FORD. I have told you all I can remember at this time.

Mr. PECORA. Tell us what Mr. Longley said to you about the same subject.

Mr. FORD. The discussion was on the same subject, and I cannot vary it any. I mean, the whole problem was discussed and certain conclusions were arrived at that the application be made.

Mr. PECORA. How much was to be sought from the R.F.C. for the relief of the group and its banking units?

Mr. FORD. That figure varied. Originally I think the idea was, as I have said before, for the requirements of the Union Guardian Trust Co. Then there was a much bigger commitment asked, I think, to take care of all these requirements for the units, which was some sixty million, I think. Then it was reduced to forty-one or forty-five millions, or something like that.

Senator COUZENS. Before you got to the point of including all of the other units of the group did you frame an application for a loan for the Union Guardian Trust Co. by itself?

Mr. FORD. The Union Guardian Trust Co. already had a loan.

Senator COUZENS. But was there not another plan to add to that? Mr. FORD. Yes, sir; to add to that.

Senator COUZENS. How much were you asking for in your first plan?

Mr. FORD. I have not the figures here, Senator, and it is awfully hard to remember; but at some time I know that there were 24 or 25 million dollars of deposits and they wanted sufficient money to take care of the deposit liabilities, and as I tried to memorize it, there were about 14 millions, but I am not positive.

Senator COUZENS. Then that was afterward enlarged, as I understand the testimony to state, to a larger amount to include all the units. Is that correct?

Mr. FORD. Yes, sir. I think, on the suggestion of the R.F.C.

Senator COUZENS. Do you know what security was offered to take care of the application for the Union Guardian Trust Co.? Mr. FORD. The second application or the original one? Senator COUZENS. The second application.

Mr. FORD. The kind of security?

Senator COUZENS. Yes; and the value that was placed upon it.

Mr. FORD. I think they offered all the remaining assets. The value that was placed on it I do not recall, but it was less than the requirement.

Senator COUZENS. It was less than the requirement?

Mr. FORD. As I understand it.

Senator COUZENS. But you do not know how much less?

Mr. FORD. Those figures changed from time to time. It was sixty some million dollars, and then it was reduced.

Senator COUZENS. I mean before you got to including all the Group, when you first made up your application to secure a loan sufficient to pay off all of your depositors in the Trust Co., there was a deficiency, as I understand it, between the securities offered and the amount of the loan applied for?

Mr. FORD. Yes, sir. I do not remember what that was. I remember what the final deficiency was, but I do remember what that was at the time.

Senator COUZENS. What was the final deficiency?

Mr. FORD. It was about $7,000,000.

Mr. PECORA. Are you familiar in any way with the results of the conferences that were had with members of the board of the R.F.C. by officers and directors of the Guardian Detroit Union Group during January and February of 1933 with respect to the Group's application for a loan from the R.F.C. to enable the Group and the unit banks to take care of the situation in which it then found itself? Mr. FORD. Yes; I think I am.

Mr. PECORA. Tell the committee what you understand to have been the course of events.

Mr. FORD. I thought I already had-that Mr. Kanzler and Mr. Longley came to Washington and contacted the Reconstruction Finance Corporation and made this request. The Reconstruction

Finance Corporation sent appraisers or technical men to Detroit to appraise the assets, and then they had various meetings, or several meetings, with the R.F.C. board and others that were interested-I think, Treasury officials. It was a matter of negotiation from then on, which took many days. The first trip was made in the latter part of January, I believe, and then there was another trip on the 6th or 7th or 8th of February.

Is that what you want, Mr. Pecora?

Mr. PECORA. Well, I want whatever you know of that.
Mr. FORD. Well-

Mr. PECORA. Is that all you know about it?

Mr. FORD. I would much rather have you ask me a specific question. It seems to me that I have covered that phase of it. I said they contacted with the R.F.C. officials, and after that it was a matter of negotiation as to the value of the assets, the value of the collateral pledged, and the amount of loan required, and the details started to be worked out.

Mr. PECORA. You understood that the R.F.C., as the result of conferences that its members had with officers of the group, sent examiners to Detroit to examine the assets of the unit banks and of the group which would be available as security for a loan that was sought from the R.F.C.?

Mr. FORD. Yes, sir.

Mr. PECORA. Do you know the result of the examination of those assets by the examiners for the R.F.C.?

Mr. FORD. I have been told that the assets which were first presented were not of sufficient value; that the officers that came down here were told to put in the slow assets, not to put in the liquid assets; that the slow assets, provided they were all right, would be just as suitable for a loan of that kind; and they did that. Then, when these figures were made up the collateral was insufficient and they came back to Detroit and put in additional collateral.

Mr. PECORA. Well, with the additional collateral, was the amount of the security found sufficient?

Mr. FORD. It was insufficient.

Mr. PECORA. By what amount?

Mr. FORD. Six or seven million dollars, I believe.

Mr. PECORA. Was any suggestion made with regard to that 6 or 7

million dollars?

Mr. FORD. To me?

Mr. PECORA. To you.

Mr. FORD. For what purpose?

Mr. PECORA. As to how it might be taken care of.

Mr. FORD. That we supply it?

Mr. PECORA. Yes, sir.

Mr. FORD. Yes.

Mr. PECORA. What suggestion was made to you on that subject? Who made it, and what was the outcome of it?

Mr. FORD. I think Mr. Kanzler made it-perhaps Mr. Longley. I discussed it with both-the question of subordinating the balance of our deposits in the Union Guardian Trust Co.

Mr. PECORA. Do you recall how much your company had on deposit in the Union Guardian Trust Co. at that time?

My Form it me just that. that we supply, i think, $5. 000000 more Me Pacory What tenton uld you reach with regard to those

PRD. That we would not do it.

Prooks. That you would neither supply the capital required e creation of the new mortgage company nor subor rate your debsite in the Trat Co.1

Mr. Form. It did not come to a definite understanding about the bordination, but I think it was pretty generany understood what We did not make any definite agreement, cut it was ir derstood that the subordination would take place.

M: Proora. It was understood what subordination would take place

Mr. Ford. Seven and a half millions additional deposits in the Union Guardian Trust Co. I mean, in the discussion it was assumed

that we would do it.

Mr. Pecora. Did you indicate that you would do it?

Mr. FORD. Yes.

Mr. PECORA. Did you state that definitely to Mr. Kanzler or Mr. Longley or any other officer of the Group?

Mr. FORD. I think I did; yes.

Mr. PECORA. Was that communicated to the R.F.C.?

Mr. Forn. I do not recall. I did not do it: I did not communicate with them. I don't know whether they did or not; perhaps so. Mr. PECORA. Did you authorize them to tell the R.F.C. that your company would subordinate its deposits in the trust company?

Mr. FORD. I do not believe it was quite as definite as that, but it was a possibility, if everything else worked out all right. I mean, if that was the only thing left to do.

Mr. PECORA. If that loan would meet the situation you indicated that your company would be willing to subordinate its deposits! Mr. FoRD. Yes, sir.

Mr. PECORA. Did you not understand at the time that there were requirements in addition to that?