banks must also be profitable, we must constantly be assured that the broad public interest is being properly served.

Our present Comptroller of the Currency, the Honorable James J. Saxon, who is our witness today, has excellent professional qualifications for his present post. He is both a banker and a lawyer, having served in an official capacity with a large national bank in Chicago and with the American Bankers Association.

In recent years the banking community and the public generally, have been disturbed by reports of sharp disagreement involving all three of the Federal banking agencies-your Bureau, the Federal Reserve, and the Federal Deposit Insurance Corporation. A number of rulings and policies of your Office as well as matters connected with several national bank failures seem to be at the heart of these public controversies. We would like to go into some of these matters today to determine whether enactment of H.R. 107 or H.R. 6885, as introduced or as may be amended. would not only end interagency strife, but also better serve the public interest than the present hodgepodge.

Mr. Saxon, since you recently testified on these same bills at some length before our subcommittee, I will ask you to file your statement for the record so that all of the members will have an opportunity to question you. If we finish today, it will not be necessary to ask you to return tomorrow. Many members of the full committee have not had the opportunity to get acquainted with you before now and we are glad to have you here today.

We have a bill on the floor, Mr. Saxon, the housing bill, one of the most important bills of the session, and we would like to quit today at 11:45. Therefore, it is probable that we will not get through and will ask you to come back tomorrow. It depends upon the situation, of course. After the housing bill, there is the poverty bill and then the coinage bill, all set for floor action.

So we have a very full schedule.

We are delighted to have you. Do you have a prepared statement?

STATEMENT OF HON. JAMES J. SAXON, COMPTROLLER OF THE CURRENCY

Mr. SAXON. No, Mr. Chairman.

The CHAIRMAN. That is all right. You had already appeared before Mr. Multer's subcommittee before on the same subject. Mr. SAXON. Yes.

The CHAIRMAN. Those hearings have not yet been printed, but they will be available later this morning. That will be of help to our committee, of course. We feel like we have a great challenge, Mr. Saxon, in this war on poverty. In my view, extortionate, excessive, usurious interest rates are a curse on the poor and do more to create poverty than most anything else in the country. These extortionate interest rates to poor people especially, cause, I suspect, more poverty than any other one thing and, therefore, I think it is a great challenge to you and to all who have something to do with the creation of money and the distribution and use of money to make sure that the public is not imposed upon. I do not believe you have such a difficult job because so few are doing that.

Generally the financial institutions are all clean and doing a good job, both in times of war and peace, but there are a few that have gotten kind of out of line and are causing a lot of trouble, and I believe that you could render a great public service by making sure that the public is protected in this war on poverty due to excessive, extortionate inter

est rates.

I would like to ask you a few questions. However, Mr. Multer would like to make a statement first.

Mr. MULTER. Before we get into the questions, since the Comptroller does not have a prepared statement, I would like to say at this time as I did at the opening of the hearings before the subcommittee which I have the privilege to chair, on these bills, H.R. 107 and H.R. 6885, that neither of these bills are aimed at James Saxon, the individual, nor at any particular thing that people may not like that he did or did not do.

I would like to make it very clear that although James Saxon has been a longtime intimate friend of mine, we have had our differences but they haven't interfered with our friendship. These have been conscientious differences of principle where we differed either as to substantive matters or as to procedural matters.

I want to emphasize that these bills are not aimed at Mr. Saxon. They are aimed at attempting to correct what we think is a situation that needs correction, and by that I mean again we are not aiming these bills at anything we think you did wrong, Mr. Saxon. They are aimed at trying to bring together in one place all the banking regulatory authority, the control authority, the chartering authority, the merging authority, the holding company authority-all of this in one place.

Now, whether this is right or not is the subject of great difference of opinion. I want to say that there is nothing in either of these bills, if either one should be enacted, that would prevent the President from continuing James Saxon, the man, in any department or commission that may be appointed as a result of these bills. I can't emphasize too strongly that despite the attacks that have been made upon the Comptroller and the Comptroller's Office, these bills are not brought about by any of those things. They are not brought about by the closing of any banks. This is an attempt to improve if we can improve the authority now vested in the Federal Government to supervise and control and regulate its banks, its banking institutions, and the chartering thereof, the branching and all that goes into the good and proper operation of the banking system on the national level.

We know that the State supervisors have very serious differences of opinion with us. You may also have some difference of opinion as to the bills we are seeking to enact here. Even though it may be necessary to refer to some of the bank closings during the course of these hearings, again it is all with a view to trying to improve the operation rather than point a finger of wrongdoing at any individual in Govern

ment.

There may be those who were in those banks that had to be closed at whom the finger of wrongdoing should be pointed, but that certainly doesn't mean that any of the agencies, Comptroller's Office, the Federal Reserve Board, or any one Federal Reserve bank in the Federal Reserve System, or the FDIC for that matter have failed to do anything they should have done or have done things they should not have done. Thank you.

Mr. SAXON. Thank you, Mr. Multer. I appreciate the statement. Mr. WIDNALL. Do I understand that the subcommittee report has not been printed as yet?

The CHAIRMAN. It will be available in another hour or two.

Mr. MULTER. The subcommittee hearings have not yet been printed but they should be. The subcommittee has not gone into executive session. The chairman has told me after we have had these additional public hearings we will refer back the bills to executive session for marking up.

The CHAIRMAN. No; I did not state that. I am afraid there is a misunderstanding. We will all be in the same executive session and you will have your leadership

Mr. MULTER. I don't want to get into any public dispute with you on this, Mr. Chairman.

The CHAIRMAN. Certainly.

Mr. MULTER. But when these public hearings are concluded I will ask that this be referred back to the subcommittee for marking up.

The CHAIRMAN. Now, then, some basic things I think we should

Mr. WIDNALL. Do I understand there has been no action by the subcommittee as yet?

Mr. MULTER. If the gentleman will yield to me, at the request of the chairman I have withheld going into executive session on these bills and have withheld any further public hearings because the chairman indicated to me that he wanted to call certain persons before the full committee in public hearing.

Mr. WIDNALL. And we will have before noontime the benefits of the hearings before the subcommittee.

The CHAIRMAN. That is my understanding. It was sent down to the printer last night. Ordinarily they would have been here early this morning.

Mr. WIDNALL. Of course, the majority of the committee are not acquainted with any of the testimony that has been taken up to now, The CHAIRMAN. Except those who examined the transcripts. Mr. WIDNALL. We didn't receive those and we were

The CHAIRMAN. They are available at the committee office. And some members did I think examine the transcripts and some did not. Mr. WIDNALL. That is all, Mr. Chairman.

The CHAIRMAN. Fine. According to the law, title 12, United States Code, section 1, the Comptroller of the Currency shall perform his duties under the general direction of the Secretary of the Treasury. Title 12, United States Code, section 2 states that the Comptroller of the Currency shall be appointed by the President by and with the advice and consent of the Senate and to hold his office for a term of 5 years unless sooner removed by the President.

Title 12, United States Code, section 7: The Comptroller of the Currency may designate a national bank examiner to act as the chief of the examining division of this office.

Title 12, United States Code, section 4: The Secretary of the Treasury shall appoint no more than four deputy Comptrollers of the Currency, one of whom shall be designated First Deputy Comptroller of the Currency, and shall perform such duties as the Comptroller shall direct.

Next, clerks. The Comptroller of the Currency shall employ from time to time the necessary clerks, to be appointed and classified by the

Secretary of the Treasury, to discharge such duties as the Comptroller shall direct.

Title 12, United States Code, section 9: The Comptroller of the Currency is authorized to employ such additional examiners, clerks, and other employees as he deems necessary to carry on the provisions of this title and to assign to duty in the office of his Bureau in Washington, such examiners as he shall deem necessary to assist in the performance of the work of that Bureau.

Now, necessarily that will require a lot of people working for you, Mr. Saxon. How many national banks are there now under your jurisdiction?

Mr. SAXON. There are approximately 4,800, sir.

The CHAIRMAN. 4,800. Now, how many people do you have working for you in all?

Mr. SAXON. Including Currency Issue Redemption Division, about 1,500.

The CHAIRMAN. Do you have regional offices? If so, how many? Mr. SAXON. We have 14.

The CHAIRMAN. And they are scattered in different sections of the country for the convenience of those who are served.

Mr. SAXON. And for the convenience of our office administratively. The CHAIRMAN. Who are at these offices primarily? Are most of them examiners or

Mr. SAXON. They are all career examiners who have come up through the ranks and appointed to those positions.

The CHAIRMAN. And you have your chief examiner here in Washington and reports are made from them to him, is that correct? Mr. SAXON. Yes. Correct, and to the deputies; yes, sir.

The CHAIRMAN. Yes, sir. And how often are those reports made by the field examiners to the chief examiner here in Washington?

Mr. SAXON. They first go through the regional comptroller in each of the 14 regions and then to our headquarters office at the same time that they are sent to the banks which were examined.

The CHAIRMAN. Now, last year you spent-let's see, 1963 is the latest report we have here on this expenditure. Let's see. How much were your expenses at that time?

it.

I am asking you to be exact. About $16 million? Approximately? Mr. SAXON. In 1963, sir?

The CHAIRMAN. Yes, sir.

Mr. SAXON. I don't have my figures here but I think that is roughly

The CHAIRMAN. Roughly that is it. Now, of course, that includes everything I mean, that money is for the purpose of taking care of the necessary expenses. From whom do you get this money? Mr. SAXON. It comes all by assessments against national banks. The CHAIRMAN. The national banks. Do they pay all salaries and expenses?

Mr. SAXON. Yes, sir.

The CHAIRMAN. Your own salary?

Mr. SAXON. Yes, sir.

The CHAIRMAN. You don't come to Congress for any money?
Mr. SAXON. That is correct, sir.

The CHAIRMAN. How long has that been true?

Mr. SAXON. Except for one brief period in 1933, I believe, it has been true since the foundation of the system. There may have been one other period during the depression when the funds were not available, but with these very minor instances, this has been historically true for 102 years.

The CHAIRMAN. Traditionally it has been that way, but in exceptional cases you have gone to Congress for money. But you have not done it for the last 20 or 30 years.

Mr. SAXON. No sir.

The CHAIRMAN. It all comes from the national banks?

Mr. SAXON. That is correct.

The CHAIRMAN. In your capacity whom do you consider you serve, the banks or the Government or the public interest?

Mr. SAXON. The public. And the Government, of course.

The CHAIRMAN. And you work-you are under the jurisdiction of the Secretary of the Treasury?

Mr. SAXON. Yes, sir.

The CHAIRMAN. And do you report to the Secretary of the Treasury normally?

Mr. SAXON. Yes, sir.

The CHAIRMAN. And you coordinate your work together.

Mr. SAXON. With the Secretary; yes, sir. Not on a case basis but on policies, legislation, monetary, and other matters.

The CHAIRMAN. General policies.

Mr. SAXON. General policies.

The CHAIRMAN. Now, do you consider yourself independent of the Government in any sense, Mr. Saxon?

Mr. SAXON. No. It is part of the executive branch of the Government.

The CHAIRMAN. Part of the executive branch of the Government. Mr. SAXON. In fact, it is the only banking agency within the executive branch of the Government.

The CHAIRMAN. The only independent agency?

Mr. SAXON. Banking agency within the executive branch.

The CHAIRMAN. You say independent?

Mr. SAXON. No. The only banking agency within the executive branch of the Government since the Fed and the FDIC are independent agencies.

The CHAIRMAN. You are getting off on something that I take exception to. I think the Federal Reserve is in the executive branch. Don't you consider that in the executive branch?

Mr. SAXON. I would rather not, Mr. Chairman, get into that question.

The CHAIRMAN. Well, the law is very plain.

Mr. SAXON. I think the Federal Reserve considers itself an independent agency created by the Congress, responsible only to the Congress, and outside the jurisdiction of the executive branch.

The CHAIRMAN. Well, that is what they say but the Constitution, of course, is

Mr. SAXON. I would rather rely on what they say.

The CHAIRMAN (continuing). Is the best authority and the Constitution says that the Congress shall make the laws and the executive branch shall enforce them.