Imperial Valley press., 1937-05-28
News Behind the News
The Administration and Wall Street
Annual Struggle Under Way :. Or II
Mau Be Called Off

WASHINGTON.-No year seems to be quite
complete without a spectacular struggle in Con-
greSS between the administration and Wall Street.
This year may be an exception, but the makings
of a fracaS are available and inevitably will be
dragged into the arena.
1t should not surprise anyone if the Chandler
bill, the Barkley bill and the Lea DILL went
shooting through rather rapidly at this
sion despite walls from the financial district
The Chandler bill aims to reform corpora
ton reorganization practices in the interest of
the investor. The Barkley bill attempts to make
trustees of a bond issue actually an effective
means of protection for bond holders. The Lea
bill undertakes to provide that protective COM
mtteeS functionng in cases of receiverShip shall
actually function for the protection of security
holders
The three bills represent an integrated pro-
gram OF legislation designed to eliminate the
reorganization racket through which bankers
attorneys, promoters and others have gypped
the investing public all again after con-
Germs have gone bankrupt
The legislative program is an outgrowth of
the monumental investigation and study of cor
porate reorganization made by Securities Ex-
change Commissioner William o. Douglas and
DR.. Abe FortaS of Yale. High spots of the three
measures:
CHANDLER BILL: Makes mandatory the ap-
pointment of disinterested trustees in receiver
ships and keeps debtors and bankers on the out
side Provides that attorneys for trustees must
be independent Of any association with inter
ested parties. Shifts financial power welded by
bankers within control of the bankruptcy courts
Gives SEC the right to intervene in all reorgan-
ization procedures and to submit advisory re-
ports on reorganization plans prior to suomis-
sion to security holders. LegalizeS the right of
any creditor or Stockholder to be given hear
ing. Guarantees right of employees to be heard.
CThis extraordinary feature is especially unpopu-
lar in Wall Street, In general 1t attempts to
capture for the investor large gobs Of increment
previously accruing from reorganizations to those
in strategic places of power
BARKLEY BILL: Will interest holders who
bought bonds-later defaulted-after observing
the name of some large, respected bank appear
ing as trustee for the issue, only to learn that
contract terms obligated the trustee to do moth
ing prior or subsequent to default. Prohibits
trustees from having interests conflicting with
those of bond holders Imposes active protec-
tive duties on trustees Radically reduces pos
siblity of clauses which exculpate trustees from
responsibility. Seeks to eliminate situations in
which bond holders unable to force trus-
tees to action because of inability TO recruit
a fixed percentage of holders to make demands.
LEA BILL: Would make persons soliciting
authority to represent security holders furnish
a prospectus telling all about themselves and
giving other accurate essential information. EN-
powers SEC to eliminate from protective COM
mttees persons whose interests palpably conflict
with interests of security holders.