The evening star and Newark advertiser. [volume] (Newark, N.J.) 1907-1908, 1907-12-18
TO REGULATE BANKS
YORK COMMISSION
WOULD AMEND LAWS.
Misdemeanor to Permit Loans Except by
Directors Approval-Recommends
Full Power for Superintendent.

ALBANY, Dec. 1s.-Governor Hughes
has made public the report of the commits
sion headed by A.. B. Hepburn, appointed
by the Governor to suggest amendments to
the State laws governing financial institu-
lions with a view OF remedying defects UNI
covered by the recent financial panic. All
the MEMBERS agree on every recommended
ton made except as to the reserve trust
companies should hold.
The main report points out the weak
nesses of the State financial Institution
system as unearthed during the last inan-
clal troubles. and believes the recommenda-
ions made, If adopted by the Legislature,
would strengthen all weak spots. Sugges-
lions are made which will prevent the es-
tablishment of a chain of banks by the hy-
pothecation of the stock Of the first bank
controlled by such speculative syndicates.
| and increased capital demanded for branch
banks.
It is made a misdemeanor to permit
loans not approved by boards OF directors
in regular meeting, which lack OF directors
supervision was responsible for many of
the financial failures during the recent
stock market panic.
A most important recommendation gives
complete power to the State S~uperintend-
ent of Banks and eliminates the Attor-
ney-General. This Is accomplished by do
ing away with court receivers, and giving
the State Superintendent of Banks the
same powers as has the Federal Comp
troller of the Currency to at once take
possession and close weak financial insti-
tutions and to put his own men In charge
to wind up their affairs.
This. 1t is estimated. can be done at a
cost of but 10 per cent. where the cost of
the present receivers ranges from % to 80
per cent. and frequently eats up more
than half of the remaining assets of n de-
funct institution. Then the salary of the
Superintendent of Banks is to be raised
from $1,000 TO SIS, 900 a year. Upon this
point the report says:
UNLESS the superintendent is clothed
with adequate direct power TO enforce the
law, by closing a delinquent institution,
the efficiency Of the law is obviously les
sened. Under existing law he may criti-
else Objectionable practises when they
come to his knowledge and report con-
tinued delinquencies to the Attorney-Gen-
eral. His criticism is hence In large meas
ure academic and may be given scant con-
sideration by d%elinquents.
'"The authority to close offending institu-
tons and appoint receivers therefore
should be vested in the superintendent Cor
this reason and others TO be discussed
presently. We're he clothed with the power
to direct the discontinuance Of unsafe
practises.' no Institution would dare con-
tinue the same after having been admon-
ished by him.
Touching the organization of financial in
situations by speculative promoters the re-
port says:
Respecting the organization Of banks
and trust companies existing laws seem
to cover the requirements fairly, except as
to the veto power of the Banking Depart
ment.
THE establishment of a bank or trust
company, or Of a branch Of any existing
bank OF trust company. or the purchase of
the control Of one banking institution by
another. should be subject to the approval
of the superintendent,
ut should be within his province to pre-
vent the organization Of such institutions
by improper men or their establishment in
localities where business conditions do not
reasonably assure their success. The law
should be equally restrictive and explicit
as to the organization OF banks and the
establishment OF bank and trust company
branches.
The duties. powers and responsibilities
of the superintendent should be clearly
defined. Trust companies in the city of
New York are not allowed to organize
with a less capital than $500, 900.
I'VE think that banks should not here
after De permitted to have branches I'M
less they possess a capital of $500, 900, and
we think that both banks and trust com
panies should be required to furnish an
additional 100000 capital for each branch
opened"