The Washington times., 1924-02-11
WOULD AMEND
BANKING.
LAWS
McF Fadden to Introduce Bill
Permitting Branch Banks
At Present Session.
BY HARRY GUSACK.

A move to modernize the national
banking laws, with the view Of lift.
ing the handicaps under which ma.
ttonal banks are now labOrthg, as
well as q solution Of the long-pro-
eracted controversy over branch
banking is sought in a bill drafted
by Congressman Louis T. McFadden
Of Pennsylvania, chairman Of the
House Banking and Currency Com:
mittee. Mr.. McFadden states that
he viii press for the early passage
Of an Omnibus bill at the present
session of Congress, which would
make sixteen amendments in the
laws now governing the operation
OF more than 5000 Federally char:
tered' banks. -r-'
Would Permit Branches
National banks would be per.
1nitted, under the McFadden bill, to
establish branches in States where
State banks are allowed this priv.
1lege. and prohibit, after the pas.
sage Of the proposed act, the ex.
tension of Statewide branch bank.
ing in the Federal Reserve System.
The teller window" stations,
which the Comptroller Of the Cur
banks may open when duly author.
lied, Mr.. McFadden says he regards
o.. branches. AS such they are
handed down by the Supreme Court
onfthe branch bank issue.
National banks would be per-
Mitted to engage in buying and
selling Investment bonds under an
other important amendment the
bill. proposes. To enable them to
meet the increasingly keen compe-
titton from State banks the one
year limit which now applies to
loans on real estate would be lifted,
and national banks would be per-
nnttted to loan up to one-haf Of
their time deposits on these loans,
instead Of only one-third as at
present. This amendment is de.
signed to enlarge the scope of ma
tional banks activities in this field
and Mr.. McFadden declares it to
b one Of the most important
changes he proposes.
Other changes proposed would
permit national banks to:
Declare stock dividends as q
means Of Increasing their capitali-
0ation.
Obtain charters to handle per-
Detual trusts.
Engage in the safe deposit busi-
ness, either by operating safe de-
posit facilities directly or by own
ing stock in company which car
ries on this service.
Make the circulation Of false re.
ports about banks a Federal Of
tense.
Rediscount notes, when secured
by Government bonds, in excess of
the present 10 per cent Limitation.
Other Amendments.
Other amendments contained in
the bill are aimed ait dispensing with
unnecessary red tape in bank opera.
tons and at reducing expenses. In
discussing the need for bringing
the national bank laws up to date
Representative McFadden states in
Of the American Bankers Associa-
ton:
"The handicaps under which the
national banks are laboring arise
partially from the fact that the
National Bank Act was written
more than sixty years ago. It has
been frequently amended in a de-
sire to meet changing conditions,
thereby developing situation in
which there are inconsistencies as
between the various amending
clauses, and very great difficulty In
their Interpretation.
'While no radical changes are
suggested in the bill which l ex'
pect to introduce in Congress, the
cumulative effect Of Qualification
and modernization Of SO many
items will effect a radical improve.
ment in the position Of the national
banks. -,
"On questions where the bill
seems to suggest any material di-
vergence from the original pr1nc1'
ples Of the act 1t might be we'll to
saw In advance that this divergence
/ A much greater in theory than 1t Is
IA practice. Most of the apparent
liberalizing provisions are along
lines under which the most conser-
vative and successful State institu-
tons have been operating under
state laws for years, and represent
PRINCIPLES which the national banks
have recognized and to large ex'
tent practiced through the setting
up of cumbersome machinery in the
Vay Of collateral and subsidiary in.
atitutions and, in some cases, nc
doubt by more or less direct eva
oions Of the wording, but not neces
marily Of the spirit Of the act.
"To solve the branch banking
question the bill would amend the
existing law by permitting national
banks to establish branches In
States where State banks are per
mitted this privilege and by pro
hibiting, after the approval Of the
proposed act, the extension Of State
wide branch banking in the Fedora
reserve system.
Would Solve Problem.
Legislation to this effect would
solve the branch bank question ii