• U.S.

THE GOVERNMENT: Fed Up

3 minute read
TIME

Most businessmen are known by the company that keeps them. Not so, burly old Amadeo Peter Giannini, the J. P. Morgan of the West Coast. The 495 branches of his Bank of America mirror “old A. P.’s” domineering personality as sharply as the name of his huge bank holding company, Transamerica Corp., mirrors his ambition.

Son of an Italian immigrant, A. P. symbolizes to millions of depositors the small man who has lifted himself up without toadying to “the interests.” Conversely, most of the interests hate the Giannini guts. The nation’s biggest branch banker, he is notably scornful of Wall Street, has enjoyed nothing more than annoying its orthodox banking fraternity by backing New Deal financial policies. Wall Street was therefore enormously delighted last week because the New Deal had bit the only big banking hand that ever fed it.

Without warning, SEC had threatened to delist Transamerica stock on the charge that its registration statement contained “false and misleading statements.” That all was not rosy between Banker Giannini and the New Deal was first indicated last spring when Franklin Roosevelt in his monopoly message called for “gradual separation of banks from holding com pany control.” Wise old A. P. had already prepared for such a contingency year and a half ago by rearranging Transamerica’s stock so it could be switched quickly to an investment trust. It was on this realignment that SEC last week cracked down with 18 specific charges, from “creation of fictitious reserves” to paying Banker Gian nini some $700,000 instead of the $1 a year he reported. Flatly denying this salary accusation, Transamerica last week claimed that the other charges were “based entirely on a theory of accounting.”

Keeping watch on bank accounting is the specific job of the U. S. Comptroller of the Currency. Until recently, comptroller was bubbling J. F. T. O’Connor, who resigned to run for Governor of California. Mr. O’Connor’s successor is Preston Delano, and banking gossip for several weeks has held that there would soon be a tightening of Federal supervision over Banker Giannini’s finances. That A. P. himself smelled a mouse became clear last month when he startled the American Bankers Association convention by announcing that he was “fed up with some of the people down in Washington.”

One of the people A. P. was fed up with was apparent last week: Secretary of the Treasury Henry Morgenthau blandly declared that SEC had consulted him before taking action. But Federal Reserve Chairman Marriner Eccles, also charged with bank supervision, was known to have rushed to Warm Springs to complain to Franklin Roosevelt that the Reserve had not been consulted until two days before SEC cut loose. Here was the sort of division in the enemy’s ranks which a great fighter like Amadeo Giannini could not fail to spot. Holding his tongue with difficulty as Transamerica stock broke a hefty $30,000,000 worth, he limited himself to snapping: “We are firmly of the belief that the motive behind this complaint is one calculated definitely to prejudice Transamerica Corp. in the eyes of the public.”

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