« AnteriorContinuar »
Senator COUZENS. How were they selected ? Mr. AWALT. This is what is done: The policy of our office for ears has been to take young men out of banks, who have had some xperience in banks, and make them assistant examiners. They must erve 3 years as assistant examiners before they can be an examiner. Ind if a vacancy occurs we take the most likely men, who have hown the best training, and so forth, to take an examination. If hey pass that examination they are appointed to fill vacancies that ccur. In other words, we have tried to make the force a career orce, so that our men will go along up through the line.
The CHAIRMAN. Do you get plenty of material that way? Mr. Awalt. Yes, sir; we get plenty of material. We have thouands and thousands of applications all the time.
Senator COUZENS. Don't you ever take the recommendations of Iembers of Congress?
Mr. Awalt. I do not doubt that there have been recommendations nade, and everybody who wants a job thinks he has to have a Memper of Congress or a Senator behind him.
Senator COUZENS. And do you ever take their recommendations? Mr. AWALT. Well, I have nothing to do with the appointment of xaminers, Senator Couzens. Senator COUZENS. Who does that?
Mr. AWALT. The Comptroller, with the approval of the Secretary of the Treasury.
Senator COUZENS. Well, does the Secretary of the Treasury ever tell you who to appoint?
Mr. AWALT. No, sir. Senator COUZENS. Did you ever accept any recommendation of a Member of Congress during the time you were acting Comptroller of the Currency?
Mr. AWALT. There may have been recommendations to come in, but to be quite frank with you, Senator Couzens, I paid no attention to them.
Senator COUZENS. Well, I am glad to hear you say that.
Mr. SAPERSTEIN. Mr. Awalt, have you found that you have lost a great many examiners because they have been employed by banks!
Mr. Awalt. Well, I have found that we have lost a considerable number of examiners since Senator Couzens said he was going to introduce a bill to prevent examiners from going to banks.
Mr. SAPERSTEIN. Then you have had some examiners resignMr. Awalt (interposing). Yes, sir. Mr. SAPERSTEIN (continuing). Because of employment by banks? Mr. Awalt. Yes, sir. Senator COUZENS. Then they must have been planning it in advance.
Mr. AWALT. A lot of the examiners felt that you were going to put them into a blind alley. You cannot expect the normal American citizen who is ambitious and hopes sometime to get somewhere to be placed in the position where he feels he is looking up a blind alley and against a stone wall and therefore cannot go any further.
Senator COUZENS. How do you justify the statute which prohibits an employee of the Bureau of Internal Revenue from practicing before the Bureau for 2 years after he has left its employment ?
Mr. AwALT. I would say in that case, Senator Couzens, that to have a man who has been in the employ of the Government, passi. upon money claims of the Government, and then he goes out, ali he comes back to practice in regard to that money claim which a confronting the Government. As a matter of fact, as far as tan examiners are concerned, or in any other profession, you alwar: have, as in any position, some that may not turn out so well. It-try to weed out those. But great many of our bank examiners have gone out into situations and have really saved those situations ani strengthened the management of banks. I think, if you want us opinion, that a bill such as you have in mind going to the extent that no bank examiner should go into any bank he has examinai, except with the permission of the Comptroller of the Current, whether it had a 2-year limitation or not, would be a good bill.
Senator COUZENS. And you do not think that a bank esaminer erer caters to the banker in the hope of getting a good berth?
Mr. Awalt. My observations, Senator Couzens, is that most bank officials
all bank examiners. Senator COUZENS. And then turn around and employ the worst of them, is that it?
Mr. Awalt. No; I would not say that. It is something like a corporation having a lawyer defeat them in a legal case, and then they think he is pretty good and employ him. And sometimes we have banks come to the Comptroller and ask where they can get manag». ment to help correct their situation. They may ask: Have you so114 good examiner that you can recommend to us?
Senator COUZENS. What do you think of the occasional rotation of examiners, so that they will not go back to the same banks year after year?
Mr. Awalt. I think that is a good thing, and that can be accomplished without legislation.
Senator Couzens. Are you going to do more of it than you have been doing?
Mr. AwALT. I understand so; yes, sir. I might also say that I noticed you questioned the former witness on the matter of showing securities pledged for deposits, and in that connection the Comptroller has had under consideration the question of showing such things on the face of the reports. We have been working with the Federal Reserve Board for some time on changes that we hope t put into effect. They will come gradually, but we are working to ward a different type of report entirely.
Senator Couzens. What would you say to the requirement on the part of the Comptroller's Office for national banks to state the amount of loans made to directors, officers, and employees?
Mr. Awalt. In the face of their report?
Mr. Awalt. I haven't given any consideration to that, Senator Couzens. Offhand I would not think it would be so good. But you have a provision in your 1933 Banking Act that they cannot loan to any executive officer. This is what occurs to me in that respect; When you say directors, you have men who may be directors of banks and who are also in corporations, we will say. It may be a small community, where there is a fellow in the feed business, or
mething of that sort. Such people cannot very well get accomodations in another town, and, say, they wanted to borrow from le bank, and they may have a loan for small amount, but the feed rporation, or whatever it is, borrows from the bank, and they ndorse the obligation. The bank is protecting itself in that way, it that shows up as a loan. It is indirect, it is true, but it would, think, give a sort of false impression. Senator COUZENS. Wouldn't it act as a deterrent to directors and nployees borrowing from banks if the total amount had to be hown on the statement? I am not saying that they should not orrow, and I haven't the feeling that a director should not borrow, ut when they do borrow I see no reason why the extent of their orrowings should not be printed in the public statement. In other ords, I think testimony has been disclosed here that there was some bjection to any bank having to borrow money, and that they conured up every sort of device to prevent a showing of bills payable, hich brought around an absurd situation. I see no particular objecion to a bank having to borrow money. That is what the Federal Reserve System is for, isn't it?
Mr. Awalt. Yes, sir; unquestionably it is. But sometimes they orrow to make loans that should not be made, perhaps, and in hat case they are subject to criticism, naturally.
The CHAIRMAN. Coming back to this idea of not mixing politics vith the service, to which I do not dissent, it seems to me you vant among your examiners men of character, men of upright onduct. Mr. AWALT. That is right. The C# AIRMAN. And trustworthy men. Mr. Awalt. Yes; certainly. The CHAIRMAN. And courageous men. Mr. AwALT. Most certainly. The CHAIRMAN. And men of good judgment. Mr. AWALT. Oh, yes.
The CHAIRMAN. And if a Senator or a Congressman knows of an applicant, and has known him all his life, and knows his antecedents, knows his character and standing and conduct, and he certifies to that, not as to his competency as an examiner which you must test out and decide, but as to his character, that ought not to harm him with the Department, I take it!
Mr. Awalt. No; I shouldn't say it should harm him.
The CHAIRMAN. Oh, yes; examine him; but I am speaking of fundamentals, as to his character, and his antecedents, certifying from personal knowledge of those elements without regard to the other. Of course he ought to be examined. Mr. Awalt. No; I think unquestionably, Senator Fletcher, that if
you know a man, and naturally if you have investigated him, and we wanted to find out whether the man was any good or not and you could tell us that he was and that you knew all about him, that is a source of information just like any other source of information; and coming from one who holds the position you do I suppose it would be given considerable weight.
The CHAIRMAN. Have you anything further, Mr. Saperstein!
Mr. SAPERSTEIN. I have no further questions to propound, if Sesator Couzens has not.
Senator COUZENS. I have no more questions.
Mr. SAPERSTEIN. Mr. Chairman, I suggest that the subcommittee now adjourn.
The CHAIRMAN. You are excused, Mr. Awalt. We thank you for coming
Mr. Awalt. I am glad if I have been of any service. (Mr. Awalt left the committee table.)
Senator COUZENS. Mr. Chairman, does this now end the Detroit hearings?
The CHAIRMAN. How about that, Mr. Saperstein?
The CHAIRMAN. Before adjourning, let me put this statement ou the record: This subcommittee began its hearings on April 12, 1932
, and they have extended down to date, and are not yet complete
. But we have developed sufficient facts to warrant and, as we believe, have laid the foundation for legislation. Accordingly today I introduced a bill with reference to securities exchanges, and I think that bill, together with a statement which I made and which will be in the Congressional Record, will be a permanent record of the action of the committee.
Now the subcommittee will stand adjourned subject to the call of the chairman. We are not certain whether we can be here on Tuesday of next week or not, but we will resume the hearings : little later on.
(Thereupon, at 5 p.m., Friday, Feb. 9, 1934, the subcommittee adjourned subject to the call of the chairman.)
MMITTEE ON BANKING AND CURRENCY
UNITED STATES SENATE
OF LISTED SECURITIES
S.Res. 56 and S.Res. 97
(73d CONGRESS) RESOLUTIONS TO INVESTIGATE THE MATTER OF BANKING OPERATIONS AND PRACTICES, TRANSACTIONS RELATING TO ANY SALE, EXCHANGE, PURCHASE, ACQUISITION, BORROWING, LENDING, FINANCING, ISSUING, DISTRIBUTING, OR OTHER DISPOSITION OF, OR DEALING IN, SECURITIES OR CREDIT BY ANY PERSON OR FIRM, PARTNERSHIP, COMPANY, ASSOCIATION, CORPORATION, OR OTHER ENTITY, WITH A VIEW TO RECOMMENDING NECESSARY LEGISLATION, UNDER
THE TAXING POWER OR OTHER FEDERAL POWERS
FEBRUARY 14 TO FEBRUARY 20, 1934
Printed for the use of the Committee on Banking and Currency