STATE GUARANTEED REAL ESTATE LOANS [S. 1173] To amend section 24 of the Federal Reserve Act to provide that the existing restrictions on the amount and maturity of real estate loans made by national banks shall not apply to certain loans which are guaranteed or insured by a State or a State authority HISTORY OF LEGISLATION S. 1173 was introduced by Senator Muskie (for himself and Senator Smith) on February 26, 1959. It was reported to the Senate by Senator Muskie on July 13, 1959, with technical amendments (S. Rept. No. 489). It was passed by the Senate on July 15, 1959. It was referred to the Committee on Banking and Currency of the House of Representatives. No further action was taken on this bill in the House because the substance of the provision was included in section. 4 of Public Law 86-251. DIGEST OF BILL S. 1173 would authorize national banks to make real estate loans guaranteed by the faith and credit of a State, without regard to the restrictions imposed by section 24 of the Federal Reserve Act on the terms of individual real estate loans. It would enable national banks to make loans for industrial development projects where the applicable State law provides that the State or a State agency can pledge the State's faith and credit to meet the obligation. These State-guaranteed loans would thereby be placed in the same position as loans guaranteed under the National Housing Act and other Federal programs. However, the limitations imposed by section 24 of the Federal Reserve Act on the aggregate amount of real estate loans which a bank might make, which are important from the point of view of the bank's liquidity, would not be waived by S. 1173. FEDERAL DEPOSIT INSURANCE CORPORATION ASSESSMENTS ON FIDUCIARY BANK DEPOSITS [S. 1798] To amend the Federal Deposit Insurance Act to eliminate the payment of premiums on deposits of trust funds by fiduciary banks in uninsured banks HISTORY OF LEGISLATION S. 1798 was introduced by Senator Bush on April 27, 1959. It was reported by Senator Bush on July 13, 1959 (S. Rept. No. 490). It was passed by the Senate on July 15, 1959. It was referred to the Committee on Banking and Currency of the House of Representatives. DIGEST OF BILL The Federal Deposit Insurance Act now requires that banks acting as fiduciaries must pay assessments to FDIC on trust funds deposited in uninsured mutual savings banks, even though the funds so deposited are in most cases not protected by the FDIC. S. 1798 would eliminate the requirement that the fiduciary bank must pay these FDIC assessments, and it would also make it clear that there is no insurance on these deposits. OTHER BANK LEGISLATION In addition to the above bank legislation, a number of laws relating to banking and banking laws were enacted during the 1st session of the 86th Congress. For the sake of completeness, brief references to these laws will be made here. Section 420 of the Housing Act of 1949 (Public Law 86-372; see p. 32 of this committee print) amends section 5136 of the Revised Statutes (12 U.S.C. 24) to permit national banks and State member banks to purchase or underwrite long-term obligations of local public agencies if such obligations are secured by an agreement with the Urban Renewal Administration. Section 5136 had previously permitted banks to purchase and underwrite such obligations if they were short term (up to 18 months). Section 809 of the Housing Act of 1959 (see p. 36 of this committee print) provides that mortgage loans insured under section 203 of the National Housing Act shall not be taken into account in applying the limitations contained in section 24 of the Federal Reserve Act (12 U.S.C. 371) on the total amount of real-estate loans which a national bank may make in relation to its capital and surplus. As indicated above in connection with Public Law 86-278, national banks were authorized, within limits, to deal in and to underwrite securities of the TVA (by Public Law 86-137) and securities of the Inter-American Development Bank (by Public Law 86-147), without regard to the restrictions of section 5136 of the Revised Statutes (12 U.S.C. 24). Section 17 of the act providing for the admission of the State of Hawaii into the Union (Public Law 86-3) amended section 2 of the Federal Reserve Act to require the Board of Governors of the Federal Reserve System to readjust the Federal Reserve districts in such manner as to include the State of Hawaii. Sections 7 and 8 of the Alaska Omnibus Act (Public Law 86-70) deleted a number of references to Alaska which had become obsolete in view of the admission of the State of Alaska into the Union. 47365-59- -3 CREDIT UNION LEGISLATION FEDERAL CREDIT UNION ACT [H.R. 8305] [Public Law 86-354, approved September 22, 1959] To amend the Federal Credit Union Act HISTORY OF LEGISLATION H.R. 8305 was introduced by Representative Spence on July 20, 1959, following hearings by Subcommittee No. 3 of the House Committee on Banking and Currency on a number of bills relating to the Federal Credit Union Act. It was reported by Representative Spence on July 21, 1959 (H. Rept. No. 696). It was passed by the House on July 30, 1959. Hearings were held on August 21, 1959, by the Committee on Banking and Currency on H.R. 8305 and on S. 1786, introduced by Senator Sparkman on April 23, 1959, and S. 1985, introduced by Senator McCarthy on May 19, 1959. H.R. 8305 was reported by Senator Sparkman on August 25, 1959, with amendments (S. Rept. No. 814). H.R. 8305 was passed by the Senate on September 9, 1959, and on September 10, 1959, the House concurred in the Senate amendments. H.R. 8305 was approved by the President on September 22, 1959, becoming Public Law 86–354. DIGEST OF STATUTE Public Law 86-354, the Federal Credit Union Act, rewrites the Federal Credit Union Act of 1934. The principal substantive changes made by the new act are the following: 1. The maximum maturity of loans is increased from 3 years to 5 years. 2. The maximum unsecured loan limit is increased from $400 to $750. 3. Federal credit unions are authorized to cash checks for and to sell checks to their members for a reasonable fee. 4. The provisions relating to dividends by Federal credit unions are made more flexible: The board of directors is authorized to declare dividends (formerly dividends could only be voted at a meeting of the members); semiannual dividends are authorized (formerly only annual dividends were permitted); dividend credit for a month is allowed for shares paid up during the first 5 days of the month (formerly the shares had to be paid up before the month began in order to receive dividend credit). 5. The restrictions on borrowing by Federal credit union directors and members of credit and supervisory committees are relaxed. Formerly they could only borrow up to the amount of their shares; the new provision permits them to borrow up to the amount of their shares plus the amount of shares of any other member pledged as security for the loan. 6. Space may be allowed in Federal office buildings to a State or Federal credit union, if 95 percent of the members of the union are, or were at the time of admission to the union, Federal employees or members of their families. 7. Specific provisions are included dealing with the conversion of credit unions from State to Federal charters and vice versa. 8. A number of changes are made in the organizational and administrative provisions to make the operations of Federal credit unions more efficient. These changes include (a) Appointment, and suspension subject to the approval of the members, of supervisory committees by the board of directors. Under previous law the supervisory committees were elected by the members. (b) Appointment of one or more loan officers by credit committees. The loan officer would be authorized to approve loans up to the insured loan limit, or over it so far as secured by pledge of shares. Such loans formerly required approval by the credit committee. (c) Authorization to the board of directors to appoint an executive committee to buy and sell securities, make loans to other credit unions, or approve applications for membership. (d) Authorization to the board of directors to appoint a membership officer who could approve applications for membership. (e) The board of directors would be authorized to provide compensation to loan officers and necessary clerical and auditing assistance for the supervisory committee. No executive officer, except the treasurer, may be compensated as such. 9. Federal credit unions are included within the Federal criminal laws prohibiting bank robbery and incidental crimes. The Director of the Bureau of Federal Credit Unions is required to make a study of the desirability of providing for federally chartered credit unions. A report on this study, with recommendations for legislation, is to be submitted to Congress on or before April 15, 1960. INTERNATIONAL FINANCE LEGISLATION U.S. PRIVATE FOREIGN INVESTMENT The Subcommittee on International Finance held hearings on the effect of private foreign investment on U.S. employment, profits, and markets on July 13, 14, and 15, 1959. These hearings were prompted by Senate Resolution 105, which was introduced by Senator Proxmire on April 21, 1959, and referred to the committee. The resolution set forth the following scope of inquiry: *** private investment of American capital abroad with a view to determining the extent of such investment; the changes which have occurred therein in recent years; the effect of such investment on domestic industries in terms of employment, profits, and markets; and the effect of such investment on the economies of foreign countries. The following witnesses presented testimony: Solomon Barkin, director of research, Textile Workers Union of America, AFL-CIO; Emilio G. Collado, treasurer, Standard Oil Co. (New Jersey); Ralph E. Cross, executive vice president, the Cross Co., Detroit, Mich.; Robert R. Nathan, consulting economist, Washington, D.C.; Stanley H. Ruttenberg, director of research, and Bert Seidman, economist, research department, AFL-CIO; Charles W. Stewart, president, and A. B. van der Voort, economist, Machinery and Allied Products Institute, Washington, D.C.; and Charles P. Taft, general counsel, Committee for a National Trade Policy. In addition statements were submitted by Texas Independent Producers & Royalty Owners Association; and U.S. Council, International Chamber of Commerce. The hearings were recessed subject to call of the Chair. |