Cover-Up in the Capital, II
I n 1934, Leo Crowley had little time or reason to enjoy the Christmas season. He had to massage Senator Glass's ego, as the senator's support or, at least, neutrality was essential to pass the administration's omnibus banking bill. But he had to be most concerned about his personal problems: O'Connor was retailing stories about his debts and banking methods in Wisconsin; Morgenthau was demanding an affidavit attesting that he had disposed of his debts; and his failure to deal with these threats would provoke the White House. His job, his reputation, even his liberty were at stake.
Of his many problems Crowley found Glass easiest to handle. The senator had phoned in mid-December, warning that an FDIC regulation setting maximum interest rates for banks, even those that were not part of the Federal Reserve System, exceeded the corporation's authority. Glass may have been correct: Crowley agreed that the FDIC was "skating on thin ice"; however, he added, somewhat undiplomatically, that the statute creating the FDIC was "a fool law," that fixing rates was "in the interest of recovery" and that the power to set them was somehow implied.1
Glass, a strict constructionist, was not amused, and a more tactful Crowley wrote him that, although the FDIC's board adopted its regulations on interest before he became chairman, it did so unanimously after its general counsel advised that the power was implied. However, he soothed, the board would review its policy "in light of your comments." Then he added other gentling words, and sent flowers. The result: On December 23, Glass responded: "There is no friend on earth from whom I would prefer to receive a floral tribute in token of personal affection than from you. I am distressed beyond expression that you are to leave Washington.... God only knows what will happen tothe Deposit Insurance Corporation. Wherever you may be you will have my Devotion and best wishes for your success and happiness."