1 Breakdown estimated.

2 Taxes on net income are estimates for 1934-41. Figures of income taxes paid by national banks were obtained from the Source Book of the Bureau of Internal Revenue for 1934-37; in 1938 the classification was changed to include all banks and trust companies; figures of income taxes of noninember banks have been reported separately since 1936. Normal income taxes paid by all banks and trust companies amounted to $4,100,000 in 1934: $6,400,000 in 1935; $14,900,000 in 1936; $11,500,000 in 1937; $12,100,000 in 1938; $14,400,000 in 1939; and $21,700,000 in 1940.

3 Profits on securities sold are not available separately except for nonmember banks
in 1934 and 1935; they are included with recoveries on securities and thus deflate the
figures of net chargeoffs on assets for those years. Profits on securities sold of nonmember
banks were $14,500,000 in 1934 and $28,400,000 in 1935; recoveries and profits on securities
of member banks were $191,800,000 in 1934 and $287,800,000 in 1935.

4 Minus (-) indicates nonoperating loss.

EXHIBIT 4

Insured commercial banks-Net profit after taxes, 1934-56, and earnings on obligations of U. S. Government, 1945-56

1 Not available. Not reported separately from income on other securities. Source: Annual reports of the Federal Deposit Insurance Corporation.

EXHIBIT 5

Insured commercial banks' capital accounts, Dec. 31, 1940-56

EXHIBIT 6

Comparison of interest paid on time and demand deposits, service charges on deposit accounts, and FDIC assessments, 1927-56, Federal Reserve members and all insured banks1

The insurance of bank deposits by the Federal Deposit Insurance Corporation became effective Jan. 1,

1934.

? Includes some interest paid on interbank time deposits. The amount cannot be eliminated from the total, but it is known to be small.

First reported separately in 1933. Prior to that time it was not a common practice for banks to make such charges.

Not published separately for Federal Reserve members. Amounts for 1950 and subsequent years are total assessments due, less net assessment income credited to insured banks.

Payment of interest on demand deposits was prohibited by the Banking Act of 1933 and subsequent legislation (with certain exceptions for a limited period). This item was not reported after 1937. Not available.

Sources: Interest payments-Banking and Monetary Statistics, Board of Governors, Federal Reserve System, p. 262, and Federal Deposit Insurance Corporation reports. Service charge on deposit accountsBanking and Monetary Statistics, Board of Governors, Federal Reserve System, p. 262, annual reports of the Federal Deposit Insurance Corporation. FDIC assessments-Federal Deposit Insurance Corporation reports.

Mr. PATMAN. Mr. Cook, I know Mr. Erle Cocke, I am sure he is a fine man and I certainly have no desire to make any derogatory statement concerning him, but he is president of the American Bankers Association and I understand he has been appointed as your successor. Has he been confirmed by the Senate?

Mr. Cook. He would not be my successor. Mr. Harl died and his term would have expired at the same time.

Mr. PATMAN. There is one thing I wish you would comment on. Since the American Bankers Association believes that the FDIC assessments should be reduced and since the FDIC Board has an opposite position, doesn't it look rather unusual for him to take a place on the Board in view of the fact that he is now president of the American Bankers Association?

It occurs to me that it would be very much like the president of the Association of American Railroads, who is in favor of higher freight rates, being selected as a member of the Interstate Commerce Commission when the Interstate Commerce Commission is trying to keep down freight rates.

Would you like to comment on that?

Mr. Cook. Just to this extent, Mr. Congressman, and that is this: I have known Mr. Cocke quite well for many years. I hold him in high regard and I am confident that when the President made the appointment he was cognizant of his abilities and as far as having any bearing on the reduction of assessment, that, after all, is in the hands of the Congress. The Board may recommend against a reduction of assessment; the Congress may decide to make it or it could be the reverse.

So the matter of the assessment is entirely within the hands of the Congress. The Board of Directors of the Federal Deposit Insurance Corporation may make recommendations, as we are in this particular case here making certain recommendations.

Nevertheless, you gentlemen of the Congress will make the decision. Mr. BROWN. Will you yield?

Mr. PATMAN. Yes.

Mr. BROWN. I have known Erle Cocke for nearly half a century. He is one of the finest gentlemen I have ever known, honorable and honest, and is regarded as one of the best bankers in America.

Mr. PATMAN. I am not taking issue with anything that is said about

him.

Mr. BROWN. He is from my State.

Mr. PATMAN. I know, and he is bound to be a great man, but I think there is a question of public morality involved here; it is not a question of an individual or personality. It is far from that. I just don't understand how that kind of selection can be reconciled to accepted practices in a democratic form of government where we are trying to administer the Government for the benefit of the people, all of the people, and trying to keep out conflicts of interest. It just doesn't seem right to me, although I am willing to be convinced.

Mr. Cooк. May I make this statement. I concur with what Congressman Brown says about our mutual friend, Erle Cocke. But let me make this clear: His term will not begin until after the termination of his presidency of the American Bankers Association which will be about September 25, so he will have no part in the deliberations

of our Board until he has been sworn in after his term expires as president of the association.

Mr. PATMAN. I doubt that that strengthens the defense any because he is president of the American Bankers Association now at the time he is appointed, and that is his background. He is committed to a reduction of assessments to the banks for the Federal Deposit Insurance Corporation, and I repeat it is very much like the president of the Association of American Railroads, who represents the railroads this year, and whose term will expire later on, being appointed to the Interstate Commerce Commission when the Association of American Railroads wants freight rates raised, and the Interstate Commerce Commission is holding the line against raising them.

It seems just that inconsistent, Mr. Cook. Do you have any comments on that that would clear up the problem in my mind and make me feel the other way? If so, I would like to have them.

Mr. Cook. Well, I would like to convince you of the contrary, sir. As I say, I have known Mr. Cocke for many years. I regard him as a man of high character and excellent ability.

Mr. PATMAN. That is not involved, Mr. Cook, I didn't ask you anything about that. I am not questioning that.

Mr. Cook. In all of the conversations I have had with Mr. Cocke he never once has mentioned anything about the reduction of the assessment for the Corporation. There is a committee in the American Bankers Association on Federal Deposit Insurance, they, of course, are active, but he has taken no part in that to my knowledge.

The CHAIRMAN. Your 5 minutes have expired. Mr. McVey. Mr. McVEY. I have one question or two to ask Mr. Cook. I have been examining your recommendations and I notice you recommend that the Corporation be permitted to appoint by its Board of Directors, attorneys, officers, agents, and to dismiss any officer, attorney, or agent. Then further you ask that the Corporation be placed on an equal footing with the Federal Home Loan Bank Board, and Federal Insurance Corporation on similar matters. I assume the committee did not agree with you in this respect.

Would you tell us the reason for disapproving your recommendations?

Mr. COBURN. Mr. McVey, at the hearings as indicated in our statement, Mr. Jennings was present during the hearings and related the procedures followed by the Comptroller, and it was suggested that the Corporation confer with Civil Service to see if we could have available to us, to the Corporation, the schedule (b) processes.

We were not able to obtain those, and, therefore, we are renewing our recommendation.

Mr. McVEY. Was that the only reason they gave?

Mr. COBURN. Yes; now it was indicated at the hearings that the Comptroller-this pertains primarily to recruiting examiner personnel, and the Comptroller. And Mr. Jennings for the Comptroller's office testified they found it reasonably satisfactory, and I think we suggested or stated positively that they felt we could live within the limitations of such processes, but since that time they have not been available to us, and we also found out that insofar as the Comptroller's Office is concerned, those procedures were only temporary and were not in any way permanent.