FINE FINANCIAL INSTITUTIONS AND THE NATION'S ECONOMY COMPENDIUM OF PAPERS PREPARED FOR COMMITTEE ON BANKING, CURRENCY AND HOUSING HOUSE OF REPRESENTATIVES 94th Congress, Second Session BOOK II PART 3-STRUCTURE AND OPERATIONS OF THE FEDERAL RESERVE SYSTEM PART 4-INTERNATIONAL BANKING JUNE 1976 Printed for the use of the Committee on Banking, Currency and Housing The report has not been officially adopted by the Committee on Banking, Currency and Housing and may not therefore necessarily reflect the views of its members. 62-784 U.S. GOVERNMENT PRINTING OFFICE WASHINGTON: 1976 COMMITTEE ON BANKING, CURRENCY AND HOUSING HENRY S. REUSS, Wisconsin, Chairman LEONOR K. (MRS. JOHN B.) SULLIVAN, Missouri THOMAS L. ASHLEY, Ohio WILLIAM S. MOORHEAD, Pennsylvania FRANK ANNUNZIO, Illinois THOMAS M. REES, California JAMES M. HANLEY, New York PARREN J. MITCHELL, Maryland WALTER E. FAUNTROY, District of Columbia LINDY (MRS. HALE) BOGGS, Louisiana LES AUCOIN, Oregon PAUL E. TSONGAS, Massachusetts BUTLER DERRICK, South Carolina PHILIP H. HAYES, Indiana MARK W. HANNAFORD, California DAVID W. EVANS, Indiana CLIFFORD ALLEN, Tennessee NORMAN E. D'AMOURS, New Hampshire STANLEY N. LUNDINE, New York ALBERT W. JOHNSON, Pennsylvania RICHARD T. SCHULZE, Pennsylvania WILLIS D. GRADISON, JR., Ohio HENRY J. HYDE, Illinois RICHARD KELLY, Florida CHARLES E. GRASSLEY, Iowa MILLICENT FENWICK, New Jersey RON PAUL, Texas PREFACE The House Banking, Currency and Housing Committee together with the Subcommittee on Financial Institutions Supervision, Regulation and Insurance announced on April 24, 1975 the undertaking of a major review of the nation's financial institutions and their regulation by the Federal Government. A project was launched, called the Financial Institutions in the Nation's Economy (FINE) Study, encompassing five areas: The relationship between banks and thrift institutions, and what changes may be desirable in their borrowing, lending, investment and customer service activities; the adequacy of federal regulation, as now divided among three government agencies for banks alone; the structure and operations of the Federal Reserve System; the operation of U.S. banks abroad, of foreign banks in the U.S., and of the Eurodollar market; and the operation of bank holding companies. A team of consultants and Committee staff, under the supervision of Dr. James L. Pierce, principal consultant to the Committee on the FINE Study, began an analysis of the major issues affecting our financial institutions. Working with staff and expert consultants, the Committee published in November 1975 a set of Discussion Principles which contained proposals for the restructuring of our financial institutions. Extensive hearings followed and ultimately legislation was proposed. As a first step in this process, the Committee commissioned for FINE a number of studies that were conducted by respected scholars who had published extensively and had experience in advising the government on policy matters in their respective fields. These studies provided an independent perspective on financial reform. The papers present a focused evaluation of important issues which touch on the many facets of financial reform and are the result of careful study by individuals who have thought deeply in their chosen area. The papers contained in this volume represent all of the studies that have been commissioned for the FINE Study. Four studies that were completed and in publishable form before the hearings began were published in a November 1975 volume. The present volume contains those four studies as well as new ones relating to international banking, bank holding companies, credit unions and additional papers on regulatory reform. Besides the studies, an extensive and detailed questionnaire dealing with the current practices and attitudes of the Federal banking regulatory agencies was prepared by the FINE Study Staff and several consultants. This questionnaire was published in the earlier volume; in the present volume the questionnaire is reprinted as well as the replies from the Federal Reserve Board and the Comptroller of the Currency. HENRY S. REUSS, Chairman, Committee on Banking, Currency and Housing. FERNAND J. ST GERMAIN, Chairman, Subcommittee on Financial Institutions Supervision, Regulation and Insurance. CONTENTS Preface (The same table or contents appears in Books I and II) FINE Study Discussion Principles- Part 1-Depository Institutions and Housing_. 1. "Housing and Financial Reorganization," by Dr. Craig Swan, 3. "Evaluations of Selected Subsidized Housing Programs," by Rich- 4. "Credit Unions as Viable Financial Intermediaries," by Dr. David I. Fand, Professor of Economics, Wayne State University. Part 2-Regulation of Depository Institutions_. 1. "The Structure of Federal Regulation of Depository Institutions," 3. "Financial Innovation and EFTS: Implication for Regulation," by 4. "Bank Trust Departments and Public Policy Today," by Roy A. 5. "Bank Holding Companies and Public Policy Today," by Roy A. Answer: Comptroller of the Currency Answer: Board of Governors of the Federal Reserve System_ Part 4-International Banking_. 1. "Foreign Bank Activities in the United States," by Jane D'Arista, 2. "U.S. Banks Abroad," by Jane D'Arista, Professional Staff Mem- (V) |