them, and that is all my comment. I think this matter of raising all of this fuss about the stockholders who have the proxy

Mr. MULTER. Would you yield to me a moment, Mr. Mumma?
Mr. MUMMA. Yes.

Mr. MULTER. Isn't it a fact that although it is the primary duty of this Corporation to protect the depositor, it is not the sole duty and you and every other stockholder in the bank want some protection, too?

The CHAIRMAN. Well, let the chairman make a statement. When a member is recognized, he isn't given any time. He can yield for a question but he can't yield time to another member. In the House you are yielded time. Here it is recognition. I think the committee should recognize this.

Mr. MULTER. I didn't know we had adopted any such rule, Mr. Chairman.

Mr. PATMAN. Mr. Chairman, when Mr. Mumma gets through I would like to finish a question which I did not finish yesterday. Mr. MUMMA. I will yield the floor to the chairman.

The CHAIRMAN. I recognize Mr. Patman for a question.

Mr. PATMAN. Mr. Cook, in 1947 you testified that you wanted to repay the $289 million to bring to an end the Government subsidy to the Federal deposit insurance system, and then after you made that statement, I asked you these questions. I shall read from that record: Mr. PATMAN. Do you want to be purged of this subsidy?

Mr. Cook. We do, sir.

Mr. PATMAN. Do you think you can get the subsidy entirely out without putting the interest back, too?

Mr. Cook. Well, Mr. Congressman, as I say, my brief exposure to the operations of the Board leads me to be careful in the statements I make and I will not make a statement which would commit our Chairman, and I would prefer to have him answer it, if you will hold that question in abeyance.

Now on page 56 of the same hearings, I asked Mr. Harl, at that time the Chairman of the Board:

Mr. PATMAN. Well, do you agree that the $150 million was subsidy or was not subsidy?

Mr. HARL. Well, I would have to agree that the $150 million and the $139 million both were a subsidy.

Mr. PATMAN. That is the reason you want to pay it back. You want to get it out of your capital structure?

Mr. HARL. That is right.

Mr. PATMAN. All right, then, that $289 million was used to purchase Government bonds, let us say; that in the first year it earned $5 million, would that $5 million be a subsidy or would it not be a subsidy?

Mr. HARL. We got the benefit of it; yes.

Mr. PATMAN. Well, is it a subsidy or isn't it a subsidy?

Mr. HARL. I think any money the Government put into the Federal Deposit Insurance Corporation, regardless of from what source, would be a subsidy. Mr. PATMAN. Would the $5 million accumulation the first year on that capital structure which was a subsidy be a subsidy, too?

Mr. HARL. I think whatever money came in, whether from interest or capital, would be a subsidy.

Mr. PATMAN. And you agree the interest would be a subsidy?
Mr. HARL. Yes, sir.

Now, then, in further questioning on that subject I have endeavored over the years to get an accurate statement of the amount of interest that had accumulated up to the time that you paid back this capital to the Government. I commend you for wanting to pay back the

capital. I am not objecting to that, but at the same time the interest which had accrued up to that time should be paid back. Mr. Harl did not say it should be paid back, but he said it was also subsidy, and I say it should be paid back, too.

The FDIC officials, I understand, in making speeches over the country, are boasting of the fact that they have purged themselves of any Government subsidy; saying that the FDIC is wholly owned by the insured banks, and that the FDIC has no subsidy in it. Is that correct or not correct?

Mr. Cook. It is correct that we have repaid not only the original $289 million, but under the Banking Act of 1950 we paid over $80 mil lion of interest according to the law that the Congress laid down.

Mr. PATMAN. Well, you paid $80 million of interest on other capital, but there is another amount of approximately $40 million of accumulated interest on the original capital paid by the Government which Mr. Harl said was also a subsidy; that interest has not been repaid, and the point is I don't think the officials of FDIC should continue to say that you have no subsidy at all in your capital structure when there is at least $40 million in that capital structure that is a subsidy.

Mr. Cook. Those statements are made because you and the Congress computed the amount that we should pay and we paid it. So we do not consider that we have any further subsidy.

Mr. PATMAN. Well, let me differ with you a little bit on your statement that the Congress computed it. I think on the other side, in the Senate, Senator Douglas said that 2 percent would be all right and you agreed on 2 percent. But why should we have agreed to an arbitrary amount when the exact amount was known or could have been determined?

So the point is, I do not think you gentlemen have any right to brag and boast about paying back all of your capital structure when you lack $40 million of doing it. I just want to invite that to your attention and if you do any more such boasting, I am going to answer you on it because it is not so.

Mr. Cook. Well, Mr. Patman, as I say, we abided by the decision of the Congress and we feel that we have done our part, and we are going to continue to work for the interest of the depositors of this country and maintain a sound banking system and that is what we are doing our level best to do in conjunction with the other agencies.

Mr. PATMAN. I asked for a table yesterday which I understand will be ready sometime this morning, that will show the exact amount of this subsidy. I said it amounted to $40 million; it might be a few dollars more or less.

Mr. COBURN. You have asked for compound interest on that?
Mr. PATMAN. That is right, because you received it.

Mr. COBURN. Ordinarily in banking circles they don't compute compound interest; they just compute simple interest.

Mr. PATMAN. Whenever you received $5 million in interest you invested that amount in Government bonds at the end of the year. If you didn't get compound interest, I would not want you to compound it, but if you got it, I would want to know what it amounted to. That is all, Mr. Chairman.

Mr. PATMAN. Mr. Chairman, I am inserting herewith the table prepared and furnished to me by the FDIC. It discloses that the Government furnished the FDIC $289,299,556.99, upon which it collected $122,043,467.51 before it was paid back to the Government. The FDIC commenced paying back to the Government the amount advanced as capital stock September 4, 1947, and completed the payments August 30, 1948. The FDIC also paid back $80,562,311.78 of the accumulated interest, leaving $41,481,155.73 not returned, and which is now in the FDIC capital structure.

(The table referred to above is as follows:)

July 1, 1947, to Aug. 31, 1947.
Aug. 31, 1947, to Sept. 30, 1947.
Sept. 30, 1947, to Oct. 31, 1947.
Oct. 31, 1947, to Nov. 30, 1947.
Nov. 30, 1947, to Jan. 31, 1948.
Jan. 31, 1948, to Feb. 29, 1948.
Feb. 29, 1948, to Mar. 31, 1948.
Mar. 31, 1948, to Mar. 31, 1948.
Mar. 31, 1948, to Apr. 30, 1948.
Apr. 30, 1948, to May 31, 1948.
May 31, 1948, to June 30, 1948.
June 30, 1948, to July 31, 1948.
July 31, 1948, to Aug. 31, 1948.