I would just add that, Andy, you must be the second-most knowledgeable banker in the Congress, in that the most knowledgeable banker here has studied a breadth of problems which you don't have in Florida, and that has given him unique experience compared to the gentleman from Georgia. Mr. MILLER. Mr. Chairman, with your permission might we introduce the rest of the panel? Chairman ST GERMAIN. I thought I had something to say here. Before you do that, I indeed want to state to the representatives of the industry for the State of Iowa that our colleague from the State of Iowa, Mr. Leach, has been a great asset to this subcommittee, as well as the full committee. We are very grateful to the people of Iowa for sending him here to Congress, and I mean that very sincerely, because of the expertise he has and the hard work he puts in on the issues that confront us. Believe me most of the time these issues are not only difficult, they are worthy of a great deal of consideration, and they get that consideration from our colleague, Mr. Leach. Those of you from Florida, I want to say that Mr. Ireland has certainly in the short time he has been here as well shown his deep interest in the work of this full committee as well as our subcommittee. On this particular issue, thank God you are here so you get him off my back. [Laughter.] He has been driving me up a tree. Every time I turn around, on the floor, in the cloakroom, in the halls, there is Andy Ireland. So, both of you, those from Iowa, those from Florida, I believe you are very well represented. Now, Mr. Miller, you may proceed. But it is the prerogative of the chairman. He butts in any old time. BANKERS ASSOCIATION PANEL, CONSISTING OF: GEORGE A. LeMAISTRE, PROFESSOR OF LAW AND PROFESSOR OF BANKING, UNIVERSITY OF ALABAMA, TUSCALOOSA, ALA.; DONALD T. SENTERFITT, ATTORNEY AT LAW AND CHAIRMAN OF THE EXECUTIVE COMMITTEE, SUN BANKS OF FLORIDA, ORLANDO, FLA.; JOHN C. H. MILLER, JR., ATTORNEY AT LAW AND DIRECTOR OF EXCHANGE NATIONAL BANK OF BIRMINGHAM, ALA.; JOHN MILSTEAD, EXECUTIVE VICE PRESIDENT, FLORIDA BANKERS ASSOCIATION, ORLANDO, FLA.; B. G. MONTGOMERY, EXECUTIVE VICE PRESIDENT, FIRST CITY NATIONAL BANK OF HOUSTON, HOUSTON, TEX.; HUGH Z. GRAHAM, SENIOR VICE PRESIDENT, DIRECTOR OF TRUST, SOUTH CAROLINA NATIONAL BANK, COLUMBIA, S.C.; AND C. ROBERT BRENTON, PRESIDENT, BRENTON BANKS, INC., CHAIRMAN, IOWA BANKERS ASSOCIATION, FEDERAL LEGISLATIVE COMMITTEE, DES MOINES, IOWA Mr. MILLER. Thank you, sir. My name is Jack Miller. I am a lawyer from Alabama and work in this case for the Florida Bankers Association, the Florida Association of Registered Bank Holding Companies, and a number of other banks. The balance of our panel who have not been introduced so far are to my right, Mr. B. G. Montgomery, who is the executive vice president of First City National Bank of Houston, Tex., in charge of the trust division there and immediate past chairman of the trust section of the Texas Bankers Association. To his right, Mr. Hugh Z. Graham, senior vice president and director of trust, South Carolina National Bank of Columbia, S.C. Mr. Graham is currently president of the trust division of the South Carolina Bankers Association. His testimony represents the views of the South Carolina Bankers Association. To his immediate right is George A. LeMaistre, who currently holds the Alabama Bankers Association chair of banking at the University of Alabama in the commerce school, and who also teaches banking law at the law school in Tuscaloosa. As you have already pointed out, Mr. LeMaistre is the immediate past Chairman of the FDIC. Prior to his Federal service, he was chairman of the board and chief executive officer of the National Bank in Tuscaloosa, and served as president of the Alabama Bankers Association. During his banking career, he was active in the American Bankers Association, serving, for example, as vice chairman of the government relations council. Prior to his banking career, Mr. LeMaistre practiced law for a number of years. I believe that introduces everyone at the table. With your permission, I would like to make a very short opening statement and then each of these gentlemen wishes to make a short statement, addressing the points in our written testimony. Chairman ST GERMAIN. I am glad we have reached that point, so we can proceed. STATEMENT OF JOHN C. H. MILLER, JR., ATTORNEY AT LAW AND DIRECTOR OF EXCHANGE NATIONAL BANK OF BIRMINGHAM, ALA. Mr. MILLER. Thank you, sir. We are all particularly grateful to be here. A fundamental issue has been raised in the area of interstate banking. We believe the points of the issue include an attempt to circumvent the McFadden Act and the Douglas amendment imitations pertaining thereto. We believe that the issue has been raised apropos continuing the provision of trust services to small- and medium-sized customers. It seems apparent from the number of people who are on this side of the panel that the issue before this subcommittee goes beyond the boundary of any one State. We hope that our written submission provides you with the detailed explication of the events which have brought us together. For purposes of this hearing my sketch of the facts will be quite brief. The Congress last year in FIRA acted to grant to the OCC specific power to charter national banks limited to trust powers. Nothing in that provision authorizes the OCC to charter national banks across State lines. Banks contemplated by that section of FIRA are chartered under section 27 of the National Bank Act. They are insured by the FDIC. They belong to the Federal Reserve System. Seven multibillion-dollar holding companies, four located in New York, two located in Chicago, and one located in Detroit, have filed applications with either the OCC or the State of Florida to open either national banks limited to trust powers or State-chartered trust companies in Florida. Such a combination of wealth and power aimed at one State is unprecedented in American history. For example, one applicant alone has more assets in bank and in trust than all of the banks in Florida combined. Mr. Odom's testimony that interstate banking may come in a gradual manner it seems is somewhat belied by these facts. The provision in FIRA which was passed last year was undertaken by the Congress to alleviate the consequences of a lawsuit filed against the OCC in New Jersey, and no one really disagrees that it was never contemplated to be used to undo the prohibitions currently in force against interstate banking. As you know, Chairman Reuss and Chairman Proxmire in a letter to the Comptroller pointed this out specifically. The letter is included in our written submission. The OCC, as we heard this morning, and Mr. Heimann's response to that, however, takes the position that a national banking association limited to trust powers is not a bank. It reaches this position by reasoning that the specific prohibitions against interstate banking contained in the Douglas amendment to the Holding Company Act do not cover a trust bank. We disagree with that legal position, but more pointedly, we believe that the coloration of these creatures, what their relationship ought to be in interstate banking, is a policy decision and, therefore, should be decided by the members of this subcommittee, the full committee, and by the Congress. We believe that the OCC response, whereas we respect their right to give it, is totally off the mark. In Florida there has been in pace a statute that you mentioned early this morning specifically for bidding out-of-State holding company expansion into that State through the vehicle of trust companies. This statute, as you pointed out earlier, was declared unconstitutional by U.S. district court early last year. Last week, however, the Supreme Court of the United States noted probable jurisdiction in the matter. The case will presumably be heard in the court's spring term. So in the meantime, whatever the holding companies can get in Florida, they are trying to get. Only through congressional action can this state of affairs be righted. We believe it seems particularly appropriate while you all are waiting for the McFadden study to be presented to you, to defer the beginning of interstate banking at this level. We know you all will debate the issues there. We think it is premature, in the extreme, for a few giant banks to run off and try to cross State lines until you have decided the way the law ought to be. Our panel here will consider basically three areas in which we think are important to you in your deliberations. Mr. LeMaistre will address areas of economic concentration and capital formation problems. Mr. Senterfitt will briefly address the threats to the concepts of McFadden and Douglas which are inherent here, and also address in part the relief which we seek. Finally, Messrs. Montgomery, Graham, and Brenton will speak to the threats posed by the applications, not only to trust departments and trust companies in their States, but to the small- and medium sized trust customer as well. At this point in the hearing record we should like to have included a statement of the Florida Bankers Association. Thank you. [The statement of the Florida Bankers Association follows:] |