Evening star., 1938-06-23
STEAGALL DRAFTS
BANK LEGISLATION
Works Toward Three Goals
in Preparing Bill for
Next Congress.
BY WILL p. KENNEDY.

Liberalized banking legislation will
be sponsored In the next session Of
Congress by Chairman Steagall Of the
House Banking Committee, who will
spend considerable time in Washing
ton this summer conferring with the
President and high Government ON
cials preparatory to drafting the bill.
The purposes to be achieved in the
new legislation were explained today
by Representative Steagall as follows:
l. To encourage the banks to per-
form their proper function Of lending
money. through provisions that will
remove fear
2. To increase insurance of deposits,
which are now insured up to $4,000.
Mr.. Steagall feels that the insurance
should not stop under 100000, and he
says this can be done without any
additional cost or assessment on the
banks.
3. Simplihcation of examination and
control. There are examinations now
made by the Federal Deposit Insurance
Corp, by the controller general and
oVAASA dSCAlIACcs Will o A0t1ACl OAttCA
controversy now raging between several
of these.
Silent on Controversy.
Mr.. Steagall declined. however, to
comment on recent differences be-
tween Secretary of the Treasury Nor
genthau and the Federal Reserve
Board over the form Of such examina-
tions. The board and the Treasury
reached an agreement Tuesday night,
but details were not made public.
Banks and the public generally
are still suffering from the fear that
arose in the last depression, and once
that fear is removed the country As q
whole will be better off," the Banking
Committee chairman said.
He reafnrmed his faith in the ability
Of the Reserve Board to cope with
ANY situation that may arise" and
expressed opposition to congressional
proposals that the Government take
over the Federal Reserve System.
Banks Can Meet Big Need.
The banks need to be put in q posi-
ton where they can meet more ade-
quately the needs of the country" MIR.
Steagall explained. Il hope We can
work out law which will induce the
banks to resume normal operations in
the interests of trade and commerce
which will create employment and
hasten return of prosperity.
"A first step is to relieve the banks by
greater insurance Of deposits. The
banks do not loan their own money
| They loan out the funds Of the public
deposited with them. After the debacle
of SO many bank failures they are slow
to forget those days. Their normal state
Of mind is properly towards conserva-
tism. We must not leave 1t in the
hands OF any individuals or groups to
endanger the banks by withdrawal Of
funds.
No new banks should be chartered
except where there is an opportunity
to operate at a legitimate profit. and
where the capital structure affords
protection to the public
| Administration Important.
so far as the Federal Reserve
System is concerned. Chairman
Steagall pointed out, there are some
changes In the law that seem de-
sirable but. after all, the system de-
pends almost entirely on its admins
tration. There are plenty OF laws and
the present machinery is amply
equipped to deal with varying oondi-
tions that arise. do not deem 1t
necessary for the Government to take
over the stock Of the Federal Reserve
Banks to enable it to perform the
duties for which 1t was established.
The management and policy will de-
termine the success of this system.
Any one who thinks that mere trans
fer of the ownership of the stock will
improve the service rendered by the
system Is in serious error"
Regarding the need for simplifica-
tion OF examination Of banks, Mr.
Steagall stressed that there must be
strict examination and supervision, -
but he feels that this examina ton
and control should be centralized
under one agency and that its exami-
nation should BE- recognized by all
other Government agencies. He would
like to see this examination central
ICED In the Federal Deposit Insurance
Corp, where 1t belongs" he says. At
the same time he makes It clear that
he does not wish to see the controller
generals office abolished.
l